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New CFPB anti-arbitration National Merchants Association is in alignment with
the ETA, which has been outspoken about supporting
ruling will hurt consumers arbitration, as it provides higher awards more quickly
without necessitating expensive lawyers, among other
important reasons.
By Heather Petersen
National Merchants Association The CFPB provides little credible evidence to suggest
consumer protection would be enhanced by this rule.
he Consumer Financial Protection Bureau has Its study revealed the majority of consumers who filed
often fallen short of its mandate to "make con- arbitration disputes did far better financially than those
sumer financial markets work for consumers, filed in class actions.
T responsible providers, and the economy as Reduced benefits
a whole." While some bad actors work in the financial
industry – as in any industry – the cure is often worse than Proponents of class action frequently promote it as a way
the disease. The recent decision on arbitration and class for individuals to band together into a stronger collective.
action is a clear example. It's critical that we stand up and For example, a recent release by the CFPB recommends
speak out to our elected representatives about this. that individuals "join with others to pursue justice."
However, the real victors in class actions are the attorneys
The CFPB's July10, 2017, decision finalized a rule restricting – while the class members receive far less than they would
arbitration agreements in contracts for consumer financial receive via arbitration.
products. The ruling also bans class action waivers from
these agreements. While billed as an effort to protect According to the CFPB study, consumers obtained an
consumers, the ban will do more harm than good. That's average of $5,389 in arbitration versus $32.35 in class
why industry groups, such as the Electronic Transactions actions, and only 12 percent of class actions even obtained
Association, and a number of payment companies are final class settlements. The study also found arbitration is
speaking out against it. up to 12 times faster than litigation: disputes in arbitration
were generally resolved between two and eight months;
The CFPB did not truly understand the best interests of class action lawsuits frequently took more than two years.
consumers or businesses when it finalized this new rule.
Case in point: the ruling goes against the CFPB's own 2015 Ultimately, the CFPB's anti-arbitration ruling is damaging
study about what works in resolving disputes between and fails to protect consumers and businesses on every
individuals and financial institutions. The change does level. I am in favor of safeguards that preserve the rights
nothing to enhance consumer protection. and privileges enjoyed by customers and merchants and
Higher costs hopes to champion a reversal of this decision.

CFPB estimates show the ruling is likely to generate more My colleagues and I are committed to taking the necessary
than 6,000 class action lawsuits, costing businesses $2 steps to overturn this ruling. We're urging Congress to
billion to $5 billion every five years. This estimate includes immediately repeal it through the Congressional Review
604 additional federal class action lawsuits per year and Act, and we hope that others in the industry will join us
$523 million in settlement costs, defense costs and trial in this cause.
attorney fees.
Please contact these key elected representatives and
The ruling is also expected to expose an additional 53,000 encourage them to support legislation to roll back the anti-
consumer financial products and services providers to arbitration rule:
class action litigation. The rise in litigation costs will be
passed on to consumers, either through higher prices or Senator Susan Collins, R-Maine: 202-224-2523
reduced quality of products or services. This could stifle Senator Lisa Murkowski, R-Alaska: 202-224-6665
innovation and discourage new business launches – at a Senator Lindsey Graham, R-S.C.: 202-224-5972
time when payments innovation is at a fever pitch, with Senator Chuck Grassley, R-Iowa: 202-224-3744
new benefits to consumers arriving daily. Senator John Kennedy, R-La.: 202-224-4623

All responsible financial institutions recognize treating Heather Petersen is the Chief Executive Officer of National Merchants
consumers fairly is in their long-term best interests. When Association, a global leader in merchant payment processing services.
individual consumers are mistreated, they are entitled NMA is a true merchant advocate, working on behalf of businesses
to straightforward resolutions based on their specific to eliminate the unnecessary and unreasonable fees associated with
complaints. accepting electronic transactions. Visit www.nationalmerchants.com

or call 866-509-7199 for more information.

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