National Association of Consumer Advocates Blasts Lawmakers Criticism of CFPB
[The National Association of Consumer Advocates (NACA) has issued the following statement in response to the May 21, 2014 House Financial Services Subcommittee on Financial Institutions and Consumer Credit hearing, which NACA notes is misleadingly entitled “Legislative Proposals to Improve Transparency and Accountability at the CFPB.” NACA is a nonprofit association of consumer advocates and attorney members who represent hundreds of thousands of consumers victimized by fraudulent, abusive and predatory business practices. As an organization fully committed to promoting justice for consumers, NACA’s members and their clients are actively engaged in promoting a fair and open marketplace that forcefully protects the rights of consumers, particularly those of modest means. www.naca.net]
Today's hearing has nothing to do with improving the Consumer Financial Protection Bureau's (“CFPB”) "transparency and accountability." The real purpose of today’s House event is to merely, once again offer a package of bills designed to undermine and cripple CFPB.
NACA strongly opposes all eleven of the damaging legislative proposals being considered by the Committee. These bills would only make it harder for the CFPB to ensure a fair marketplace for consumers. Among all of these cynically anti-consumer provisions, we need to take particular note of the Orwellian named, “Bureau Arbitration Fairness Act” which would roll back the CFPB’s explicit authority to issue a rule to limit or prohibit pre-dispute binding mandatory (or forced) arbitration provided in Section 1028 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The bill removes CFPB’s right to protect consumers from the predatory practice of forced arbitration before the Bureau even has a chance to fully review the issue.
A top CFPB priority is to protect American consumers from unfair, deceptive, and abusive financial products. Few practices are as abusive, unfair, and deceptive as the widespread use of forced arbitration clauses buried in the fine print of most consumer contracts, including credit cards, student loans, debt settlement, credit repair, auto financing, and payday loans. Forced arbitration clauses eliminate Americans’ access to the courts, forcing them instead into a rigged and secretive system set up by corporations to favor corporations.
The CFPB released preliminary data on December 12, 2013 on forced arbitration that supports what consumers’ experiences have long proven. Due to the high prevalence of forced arbitration clauses and class action bans, corporations are shielded from being held accountable for bad behavior. Meanwhile, consumers are unable to seek redress for the harm.
“In the Dodd-Frank Act, Congress recognized the need to provide a fair and open financial marketplace for consumers by authorizing the CFPB to study, and if needed, restrict the use of forced arbitration,” said Ellen Taverna, NACA’s Legislative Director. “The CFPB must be able to retain this important responsibility.”
The “Bureau Arbitration Fairness Act” should not be confused with the Arbitration Fairness Act of 2013(“AFA,” H.R. 1844/S. 878), introduced by Rep. Hank Johnson (D-GA) and Senator Franken (D-MN), which would create actual fairness for consumers and workers by preventing the use forced arbitration clauses in consumer, employment and antitrust agreements. The AFA restores the balance between individuals and powerful corporate interests by reinstating American’s ability to choose to hold corporations accountable for wrongdoing in a courtroom or in arbitration.
For more information, you can contact: Ellen Taverna