Banking Industry Trade Groups Oppose CFPB Credit Card Arbitration Survey


On August 6, three banking industry trade groups submitted a joint comment letter pursuant to a proposal by the CFPB to conduct a survey of credit card holders in connection with its ongoing study of arbitration agreements.  The survey — intended to evaluate “consumer awareness of dispute resolution provisions in their agreements with credit card providers” — will compile information relating to card holders’ perceptions and valuations of arbitration and litigation, but will not solicit impressions of such proceedings themselves.   In the comment letter, the trade groups suggest that the survey’s design “is inconsistent with the Consumer Financial Protection Act (CFPA) mandate and is flawed in concept and execution.”

Section 1028 of the CFPA authorizes the Bureau to study, and potentially regulate, arbitration agreements.  Any exercise of rulemaking authority under Section 1028 must be based on a finding —consistent with the study conducted — that the regulation is “in the public interest and for the protection of consumers.”  The trade groups express concern that the proposed survey will not produce “meaningful” information about what regulation will best serve the public and protect consumers because complex questions about consumers’ “limited and uninformed assessments and preferences” will fail to offer useful information to evaluate the arbitration process.  The trade groups suggest that, instead, the CFPB should pursue peer-reviewed research that compares various methods of consumer dispute resolution, such as litigation and arbitration, to meet its obligations under the CFPA.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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