We gratefully support and applaud the Consumer Financial Protection Bureau’s (CFPB) continued efforts to vigorously protect consumers. Our organizations, representing millions of consumers, write in support of the recent petition for a rulemaking to address the fine print trap posed by forced arbitration clauses, which give companies that violate the law a get-out-of-jail-free card, blocking consumers from accessing the courts and trapping them in a private dispute system that is secretive, biased, and lawless.
Forced arbitration clauses included in the take-it-or-leave-it fine print traps of financial products and services continue to undermine many of the consumer protection laws and regulations the Bureau is working hard to enforce. While Congress is working on multiple legislative initiatives, the Bureau is the most well-positioned to address forced arbitration for financial products and services.
Forced arbitration is systematically biased against consumers. In such an unfair playing field, with no transparency and no ability to appeal decisions, financial services providers overwhelmingly prevail against consumers. The United States Constitution gives people the right to a jury trial. And yet, a recently released study from the University of Michigan’s law and psychology lab re-affirmed what the Bureau found in 2015: 99% of consumers trapped by the fine print of forced arbitration clauses have no awareness or understanding of the fundamental rights they have unknowingly given up. Compounding this, women, Black, and indigenous people of color (BIPOC) are more likely than white men to be forced into arbitration, exposing these populations to further inequities within a forced arbitration system that already disproportionately impacts BIPOC, low-income, or female consumers.
Consumers must be given a meaningful opportunity to choose, after the harm has occurred, how to proceed when they have been harmed or defrauded by a financial institution, whether through arbitration or through the public courts. Restoring these critical consumer rights and allowing consumers to make the choice on how they wish to exercise their rights is the only path forward toward ensuring full accountability and fairness in the financial marketplace. We urge the Bureau to issue a rulemaking addressing forced arbitration and restoring a consumer’s right to choose how to resolve disputes. Thank you for your continued commitment to consumer protection and for considering our views on the urgent need to address forced arbitration.