By prohibiting customers from waiving their ability to participate in class action suits, the proposed rule would permanently increase the number of class action lawsuits by the thousands and raise legal costs by up to $5.2 billion over five years, according to the bureau’s own estimates. Many banks include mandatory arbitration clauses in their credit card and deposit account agreements in order to manage the unpredictable costs of class action lawsuits.
ABA and the other trade groups said:
It is consumers who will truly suffer if the proposed rule becomes final. As taxpayers, they will pay for the increased costs to the court systems required to handle the...additional class actions. As litigants, they will suffer increased court backlogs that long delay resolution of their cases. As customers of the providers, they will be saddled with higher prices and/or reduced services, because the billions of dollars in additional class action litigation costs will be passed through to them in whole or in part.
With arbitration likely to disappear under the rule, ABA said, the CFPB would also impose burdens on customers whose claims cannot be resolved through class actions, instead requiring them to go to court for minor, non-systemic disputes. As ABA has noted on multiple occasions, the bureau’s own study found that arbitration is fair, as well as “faster, more economical and more beneficial to consumers than class action litigation.”
In a separate letter, the American Bankers Insurance Association emphasized that the CFPB lacks authority to impose rules on “policy loans,” which are part of the business of insurance and regulated at the state level.
Read the joint comment letter.