NELA Submits Comments To CFPB On Use Of Arbitration Agreements 

07-18-2012 06:02 PM

The Consumer Financial Protection Bureau (CFPB) launched a public inquiry into how consumers and financial services companies are affected by arbitration and arbitration clauses. Via the Dodd-Frank Act, Congress required the CFPB to study the use of pre-dispute arbitration clauses in consumer financial markets and conferred the Bureau the power to issue regulations for the protection of consumers consistent with the study.

Based on our expertise in the area of forced arbitration clauses in employment agreements, NELA provided suggestions for the appropriate scope and sources of data for the Bureau’s study as well as its report to Congress. We advised: As a fundamental concept, no system of justice can succeed without the confidence of its participants. The mere act of having a stronger party create the rules, select a provider, and force them on a weaker party is inconsistent with the principles of neutrality and fairness demanded by our nation’s civil justice system regardless of any statistics. Among other things, forced arbitration creates an unlevel playing field for workers because arbitrators typically are hired by employers, and many work repeatedly for the same employers — or “repeat players.” This results in an inherent conflict of interest on the part of the arbitrator whose livelihood depends on such business.

#ForcedArbitration #LegislativePublicPolicy

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