CFPB Director Defends Class Action Rule Over Arbitral Class Waivers

Consumer Financial Protection Bureau Director Richard Cordray argues in the NY Times for his proposed rule banning arbitration agreement provisions requiring individual, rather than class, proceedings.

Cordray summarizes CFPB study of class payouts vs. arbitration "In five years of group lawsuits, we tallied an average of $220 million paid to 6.8 million consumers per year. Yet in the arbitration cases we studied, on average, 16 people per year recovered less than $100,000 total." Moreover, "It is true that the average payouts are higher in individual suits. But that is because very few people go through arbitration, and they generally do so only when thousands of dollars are at stake, whereas the typical group lawsuit seeks to recover small amounts for many people. Almost nobody spends time or money fighting a small fee on their own. As one judge noted, 'only a lunatic or a fanatic sues for $30.'”

Trump v. CFPB on Arbitration

Trump administration trying to stop CFPB rule prohibiting arbitral class waivers. House Republicans too.

Unsurprisingly, NY Times takes CFPB's side.