Senator Warren, Representative Johnson, Over 90 Lawmakers Ask CFPB to Protect Consumers, Rein in Financial Industry's Use of Forced Arbitration

Press Release

"Since the CFPB's founding 12 years ago, the Bureau has worked tirelessly to protect American consumers, by holding repeat offenders accountable through hundreds of enforcement actions, launching efforts to save Americans billions of dollars in junk fees, and partnering with other agencies to ensure that new technologies comply with existing consumer protection laws. Unfortunately, many regulations and laws intended to protect consumers continue to be undermined and rendered meaningless by provisions jammed into fine print, such as forced arbitration clauses. Though Congress has limited the use of forced arbitration for certain sectors and cases, the Bureau is best positioned to issue a rulemaking on forced arbitration for financial products and services.

Companies hide forced arbitration clauses in the fine print, take-it-or-leave-it terms accompanying many financial products and services. These fine print traps prohibit consumers from accessing the civil justice system to resolve disputes with financial services companies. Instead, consumers are forced into a non-transparent, private system in which their position is inherently unequal relative to the company. In such an unfair playing field, with no ability to appeal decisions, it is no surprise that consumers rarely prevail over financial services providers. And yet, most consumers are unaware that they are relinquishing their fundamental right to access the court system when they sign up for a financial service or use a financial product.

Restoring consumers' ability to make the choice about how they wish to exercise their rights is important for a fair, stable, and robust financial marketplace. Given the recent findings on the lack of understanding and awareness of forced arbitration, coupled with the worsening corporate tactics stemming from forced arbitration, we urge the Bureau to issue a rule addressing forced arbitration. We also encourage other federal agencies to consider actions to rein in corporate abuse of fine print traps like forced arbitration provisions."

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