Following up on our alerts from this summer, time is ticking on the efforts to nullify the Consumer Financial Protection Bureau’s (CFPB) arbitration rule that would eliminate mandatory arbitration clauses and open the door to class action litigation. The Congressional Review Act (CRA) resolution, that would allow the Senate to dissapprove the CFPB rule by simple majority, has been at a standstill in the Senate. Per the CRA, Congress has sixty (60) legislative days, and as such the Senate must act by November 13 in order to pass the resolution. Adding to the mix, on October 23, 2017 the Treasury released a report “Limiting Consumer Choice, Expanding Costly Litigation: An Analysis of the CFPM Arbitration Rule” (available here: https://www.treasury.gov/press-center/press-releases/Pages/sm0186.aspx). Per the press release, the report found:
- The CFPB’s rule will impose extraordinary costs—generating more than 3,000 additional class action lawsuits over the next five years, imposing more than $500 million in additional legal defense fees, and transferring $330 million to plaintiffs’ lawyers;
- The CFPB’s data show that the vast majority of class action lawsuits deliver no relief to the class—and that consumers very rarely claim relief available to them;
- The CFPB did not show that its rule will achieve a necessary increase compliance with the federal consumer financial laws, despite the rule’s high costs; and
The report has drawn heavy fire from the CFPB and Democrats in Congress.
The Senate may vote as early as today.