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On August 22, the comment period closed on the Consumer Financial Protection Bureau’s (CFPB) new proposed rule seeking to outlaw arbitration agreements for consumer financial products. Leading the opposition to the unnecessary and overreaching rule, FreedomWorks Foundation generated nearly 15,000 responses opposed to the rule.
Federal law states that the CFPB should only regulate arbitration agreements if the regulation “is in the public interest and for the protection of consumers.” But the proposed rule is not about protecting consumers; it is about making it easier for trial lawyers to file class action lawsuits. The CFPB’s own study shows that for individual consumers, arbitration recovers more money, and in a shorter period of time, than class actions. The CFPB’s study, on which this rule is supposed to be based, shows that individuals recover several thousand dollars on average from arbitration in on average 2 to 5 months, while the average class action settlement individual payment is a mere $32.35 while taking 2 to 5 years.
In response to this attempted special interest handout, FreedomWorks Foundation engaged our millions of grassroots activists to comment on the proposed rule during the public comment period. Ultimately nearly 15,000 responses were submitted from across the country. The American people understand that more expensive class action lawsuits will lead to increased costs for all consumers as the sellers of financial products pass on those costs, with only trial lawyers benefiting from fat litigation fees.
"The response from our activists shows the American people are fed up with the federal government regulating on behalf of special interests,” said Ken Cuccinelli, general counsel of FreedomWorks Foundation’s Regulatory Action Center. “This proposed rule would provide trial lawyers with more lucrative litigation opportunities while leaving consumers – especially poor consumers – worse off.”
“The CFPB should abandon this unjustified and economically harmful rule,” Cuccinelli added.
The CFPB should now consider and address the comments submitted by the public. Given the thousands of public comments, it is clear that the department should abandon this unnecessary regulation that is nothing more than a handout for Democratic Party donors. The American people have sent a clear message in opposition to the CFPB’s activism. The executive branch must listen to the people.
FreedomWorks Foundation seeks to engage and educate Americans across all demographics on the principles of smaller government, lower taxes, free markets, personal liberty, and the rule of law. For more information, please visit www.FreedomWorks.org/Foundation, or contact Jason Pye at JPye@FreedomWorks.org