Forced arbitration is a scourge on consumers' access to the courts. Private arbitration is unaffordable to most people. Shockingly, the arbitrators can ignore the facts and are not even required to follow the law. Often the case is kept secret. Corporations love arbitration as a way to immunize themselves from consumer protection laws. The courts have repeatedly said that Congress must act to limit the scope of arbitration. The opportunity to do that is finally here. Last year Congress enacted the Dodd-Frank Act, which set up the Consumer Financial Protection Bureau. This agency was the brainchild of Elizabeth Warren, who is now running for Senator in Massachusetts.
Under the Dodd-Frank Act, the CFPB is tasked with studying the arbitration problem in the consumer context and could even limit the scope of consumer arbitration. The study has just gotten underway. The Consumer Financial Protection Bureau has issued a call for public comment. The CFPB seeks to learn how arbitration clauses affect consumers and how effective arbitration is in resolving consumers’ issues. This inquiry will help the Bureau assess whether rules are needed to protect consumers.
Comments are welcomed until June 23, 2012. The Request for Information on Arbitration, as submitted to the Federal Register for publication, is available here