Joint Comments to CFPB on Arbitration Rules

Dear Director Chopra:

This letter is submitted on behalf of ACA International, American Bankers Association, American Financial Services Association, American Transaction Processors Coalition, Bank Policy Institute, Credit Union National Association, Electronic Transactions Association, Independent Community Bankers of America, National Association of Federally-Insured Credit Unions, National Association of Mutual Insurance Companies, Online Lenders Alliance, Real Estate Services Providers Council, Inc. (RESPRO), Small Business & Entrepreneurship Council, and the U.S. Chamber of Commerce.

We write to urge the Bureau to deny the recent Petition for rulemaking seeking promulgation of a regulation banning pre-dispute arbitration provisions in contracts for consumer financial services.

Relying on the protections that Congress put in place when it enacted the Federal Arbitration Act ("FAA"), numerous businesses, including many companies that provide financial products or services, have for decades resolved consumer disputes by arbitration rather than through costly and burdensome litigation in our overburdened court system. Arbitration reduces transaction costs and enables fair, speedy, and efficient dispute resolution, thereby providing significant advantages to consumers, businesses, and the public at large. Petitioners offer no valid basis for depriving the public of these advantages, and there is none.

We write to highlight five overarching reasons why the Bureau should deny the Petition.

First, the Congressional Review Act ("CRA") bars the proposed rule.

Congress disapproved the Bureau's previous anti-arbitration rule in its 2017 CRA resolution. The CRA bars an agency from promulgating a rule that is "substantially the same" as a rule invalidated under the Act. The rulemaking Petition proposes just such a rule.

Petitioners' proposal would invalidate pre-dispute arbitration agreements containing class waivers—the exact category of agreements covered by the 2017 rule. And, because virtually all arbitration agreements bar class proceedings—either expressly or implicitly by failing to authorize them4—the proposed ban will have the same effect as the invalidated 2017 rule. That demonstrates that the two rules are "substantially the same."

Download the joint comment letter to read the full text.