Democrats on both sides of Capitol Hill urged the CFPB to adopt strong rules restricting mandatory arbitration agreements in financial services and other contracts.
More than 30 senators, including Democratic Vice Presidential Nominee Sen. Tim Kaine (D-Va.) and former Democratic presidential candidate Sen. Bernie Sanders (I-Vt.), signed a letter this week to CFPB Director Richard Cordray.
On the House side, more than 60 House Democrats this week sent their own letter.
“To restore Americans’ access to justice and hold financial institutions accountable, we strongly support the CFPB’s proposal to preserve the ability of consumers to band together in class actions when seeking relief through the civil justice system,” the senators said in their letter.
The House letter also said the rules are needed to protect consumers.
“There is overwhelming evidence that class action waivers in financial products and services undermine the public interest,” the House letter stated.
In May, the CFPB released proposed rules governing mandatory arbitration clauses found in many contracts. The agency said such clauses in contracts prevent consumers – including credit union members – from joining together in a suit to accuse financial institutions of wrongdoing.
The proposal does not prohibit arbitration clauses, but it specifies the language that may be used in clauses and emphasizes the fact that consumers can join a class-action suit.
Both letters tout the study that the CFPB conducted before issuing the rules. House Republicans have condemned that study, and in their version of the Financial Services appropriations bill, they are attempting to delay the rules until another study is conducted.
Senators and House members also recently sent the CFPB letters saying the agency should take into account the size of a financial institution before imposing rules on it.
Credit unions have been touting that letter since more than 300 House members and 70 senators have signed those letters.
