Arbitration and other videos

Loading...

Search This Blog

Friday, December 13, 2013

Consumer Arbitration Soon to be Regulated by Federal Agency?

Consumer Arbitration Soon to be Regulated by Federal Agency?

The Consumer Financial Protection Bureau released the preliminary results of its study on arbitration in consumer financial transactions such as checking accounts, credit cards and payday loans. Allison Frankel at Reuters says: 

 According to CFPB, exceedingly few consumers actually bring arbitration claims when they have a dispute with their credit card company, bank or payday lender. Tens of millions of consumers are subject to mandatory arbitration for disputes involving financial products and services, CFPB estimated, yet only 1,241 cases involving these products were filed with the American Arbitration Association between 2010 and 2012. Of those, according to CFPB chairman Richard Cordray, about 900 were filed by consumers. (The rest were initiated by banks and lenders.) CFPB offered some caveats, including the lack of data from JAMS Inc, which also hears consumer arbitrations, albeit far fewer than AAA. But the bureau isn’t exactly going out on a limb when it concludes that the evidence shows arbitration doesn’t provide any recovery to the overwhelming majority of consumers of financial products, especially those with small dollar claims. “Plainly, the number of arbitrations was low relative to the total populations using these products,” the report said, in a notable understatement.

A leading defender of such consumer arbitration, Alan Kaplinsky, says "The CFPB seems to be setting the stage for a rulemaking which will likely not be favorable to the industry".  For his updates see here.  A good analysis of the credit card aspect of this is here by Fred Williams. 

My views on the broader topic are here.
 

No comments:

Post a Comment