ARLINGTON, Texas — The U.S. House of Representatives took quick action to protect consumers and small businesses alike on July 25 when it voted to undo a harmful regulation enacted by the Consumer Financial Protection Bureau.
The House voted 231-190 to use Congress’ authority under the Congressional Review Act to stop the CFPB’s recently announced rule prohibiting business from using arbitration agreements with class-action waivers.
Steve Jordan, CEO of the National Independent Automobile Dealers Association, said the House vote is “encouraging” to the association, which represents the more than 40,000 independent used vehicle dealers doing business nationwide.
“It’s encouraging to see Congress act so swiftly to oppose a rule that obviously disregards the best interests of consumers,” Jordan said. “We urge members of the Senate to act just as swiftly and decisively to keep this unnecessary and harmful regulation from taking effect.”
The rule, which the CFPB finalized July 10 and is scheduled to take effect Sept. 18, is meant to steer more consumer disputes into class-action litigation rather than arbitration, which benefits class-action lawyers at the expense of the consumers.
According to the study on which the CFPB said it based the rule, 87 percent class action cases provided no benefit to the consumers involved, and in the ones that did, the average payout was a mere $32. The trial attorneys, meanwhile, averaged approximately $100,000 in fees.
Financial relief for consumers in arbitration cases averaged more than $5,000. And arbitration is up to 12 times faster and is less expensive than litigation.
The matter now will be taken up by the Senate, which has introduced a similar resolution that is awaiting a vote.
President Trump, who must approve the resolution, has said he “strongly supports” the effort to repeal the CFPB rule.
Source: NIADA press release