NIADA Expresses Disappointment with CFPB Arbitration Ruling
July 12, 2017—Steve Jordan, CEO of the National Independent Automobile Dealers Association (NIADA), said the association is "disappointed" with the Consumer Financial Protection Bureau (CFPB), which issued a final rule prohibiting the use of class-action waivers in arbitration agreements.
"We are disappointed that the bureau has decided to adopt this ill-conceived rule," Jordan said. "Today's action shows the CFPB has decided to put the interests of class-action lawyers above those of the very consumers the bureau is mandated to protect.
"Arbitraion has proven to be a faster, less expensive and more effective means of resolving consumer disputes than class-action lawsuits. And consumers who receive an award in arbitration almost always receive more than they would in a class-action lawsuit, a point proven by the CFPB's own research."
NIADA said the CFPB's study on arbitration found consumers receive on average more than $5,000 in arbitration hearings compared to roughly $32 in class-action litigation.
"This rule will force small businesses to bear additional costs in defending class-action litigation, particularly meritless suits," Jordan said. "Those costs will ultimately be borne by consumers, and in the case of those who are credit-challenged, it could prove to be too much."
NIADA senior vice president of legal and government affairs Shaun Petersen said the association will work with congressional leaders to address the arbitration issue legislatively.
"From the outset of this rulemaking process, NIADA has voiced concern about the poor policy reflected in this proposal to both the CFPB and to members of Congress," Petersen said. "As Congress considers CFPB reform, we will be urging lawmakers to overturn this anti-consumer rule."
Visit here to view Steve Jordan's 2016 testimony on the subject of arbitration before the House Financial Services Committee.
Visit here to view NIADA's comments to the CFPB regarding a rule on arbitration agreements.