Senate repeals CFPB’s new arbitration rule, says consumers recover more through arbitration
Q&A with Samuel J. Merchantpublished in The Oklahoman | October 31, 2017
On October 24, 2017, the U.S. Senate voted 51 -50, with Vice President Mike Pence casting the tie-breaking vote, to repeal the Consumer Financial Protection Bureau’s rule banning mandatory arbitration clauses in consumer financial contracts. The rule, which was passed just three months ago, would have allowed consumers to file class action lawsuits as a way to resolve disputes.
In a business Q&A with The Oklahoman, McAfee & Taft trial lawyer Sam Merchant explained why critics of the CFPB rule voted for its repeal.
“Critics argued that lawyers take most of the money in class actions — not consumers — and that consumers not only statistically recover more in arbitration than in class actions, but also they resolve their claims faster,” said Merchant. “According to the Department of Treasury, on average, only 4 percent of plaintiffs in class actions who are entitled to settlements actually recover, and each class member only receives around $32.