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CFPB Forced Arbitration Study to Go Forward as Consumer Survey Approved
photo credit: _setev via photopin cc
By Paul Bland
Executive Director
Great news Monday. The Consumer Financial Protection Bureau can finally continue a crucial study on the effects of forced arbitration on consumers. Under the Dodd Frank Act, the CFPB has to complete a study as to whether the use of forced arbitration clauses by lenders is harmful to consumers. If the Bureau finds that forced arbitration IS harmful, then it is required by the act to ban the use of forced arbitration by lenders.
We, among some others, had urged the Bureau to weigh the fact that very few consumers know anything about forced arbitration. While the clauses are justified under a bunch of rhetoric that consumers have supposedly agreed to them, in fact almost no consumers know about the rights they’ve supposedly waived. The Bureau decided it wanted to do a survey of consumers to find out what they do and don’t know about arbitration.
The Chamber of Commerce and corporate groups have vehemently argued that the Bureau should not consider whether consumers know anything about the rights that they use. So long as consumers formally have rights, banks argue, it doesn’t matter whether they know about their formal rights or not. I have been very critical of that position, arguing that of course it makes sense for the bureau to survey consumers. (We believe that the evidence overwhelmingly supports the Bureau banning arbitration in any case, but this is an additional reason.) Here’s something I wrote a while ago on this point: http://www.publicjustice.net/blog/cfpb-surveying-consumers-see-what-if-anything-they-know-about-arbitration
Anyhow, the consumer survey appeared to be slowing things down, because the Office of Management and Budget (picture the little trolls in Dilbert who work in accounting, slowing down everything and killing every good idea) was taking forever to approve this simple survey.
The roadblock has been lifted – the OMB has FINALLY gotten out of the way.