Capitol building at dusk in light

House votes to overturn CFPB arbitration rule

The House of Representatives voted on Tuesday to cancel a recent Consumer Financial Protection Bureau rule designed to limit arbitration and subject lenders to class-action lawsuits. In a 231-190 vote largely along party lines, the House voted to overturn the rule, which would have restricted financial firms from preventing customers from joining in class-action suits.

House Republicans argued that the rule would have benefitted trial lawyers far more than the customers the CFPB said it was protecting. Lawmakers made the resolution using the Congressional Review Act, which allows Congress to strike down regulations within 60 days of their implementation. The measure still has to be voted on in the Senate, and Democrats are likely to pressure more moderate Republicans to split with their party and vote against the resolution. All indications are that if the measure clears the Senate, President Trump will sign it and formally overturn the CFPB’s rule.

In an article for Forbes, Rep. Keith Rothfus (R-Penn.) and Sen. Tom Cotton (R-Ark.), sponsors of the resolution, wrote that, “This rule will be a boon to frivolous lawsuits — and a drag on our economy.”The rule was set in place earlier this month by CFPB Director Richard Cordray. If allowed to continue, it would bar lenders from making arbitration part of the terms of their loans and would open the lenders up to class-action lawsuits. While the CFPB insists that those suits bring much more justice to consumers, evidence shows that only 13 percent of class-action suits benefit consumers with an average award of $32.

The rule was set in place earlier this month by CFPB Director Richard Cordray. If allowed to continue, it would bar lenders from making arbitration part of the terms of their loans and would open the lenders up to class-action lawsuits. While the CFPB insists that those suits bring much more justice to consumers, evidence shows that only 13 percent of class-action suits benefit consumers with an average award of $32.

(Source: www.washingtonexaminer.com)

Let us know! Which do you think is better for consumers – arbitration or class-action lawsuits?

 

Related Posts

NIADA issues call to deals to support repeal of CFPB rule
Authenticom wins federal injunction against CDK, Reynolds
Latest Wells Fargo scandal threatens to derail arbitration rule reversal