Industry Groups Oppose CFPB Initiative to Conduct Telephone Survey of Credit Card Holders

Industry Groups Oppose CFPB Initiative to Conduct Telephone Survey of Credit Card Holders

 by Maryia Y. Jones and David N. Anthony 

The CFPB is seeking approval from the Office of Management and Budget to conduct a national telephone survey of 1,000 credit card holders as part of its study on which the CFPB may base its decision to limit or prohibit the use of arbitration clauses in credit card agreements.

The CFPB’s “study” of the use of arbitration clauses is mandated by Section 1028(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).  Pursuant to Section 1028(b), the CFPB may prohibit or limit the use of arbitration provisions in consumer financial services agreements if it finds that doing so is “in the public interest and for the protection of consumers” and if such limitation or prohibition is consistent with the study.

On June 30, 2013, the American Bankers Association, the Consumer Bankers Association, and the Financial Services Roundtable (collectively “the Associations”) submitted a joint comment opposing the CFPB’s request for approval of a telephone survey.  According to the Associations, the telephone survey’s perfunctory agenda of exploring the extent of consumer awareness of dispute resolution provisions” in their credit card agreements, as well as “consumers’ assessments of such provisions,” seeks information about which there is little debate or disagreement.  Given the flaws and incompleteness inherent in a telephone survey of random consumers, it “may give the appearance of a bias toward a preconceived conclusion to regulate or prohibit arbitration clauses” and override careful and detailed studies and research regarding the benefits from mandatory arbitration as compared to class-action litigation.

“Instead, we urge the Bureau to conduct rigorous and sound peer-reviewed research comparing the various methods of consumer dispute resolution, notably, litigation and arbitration, and thus satisfy the Congressional mandate articulated in Section 1028 of the Consumer Financial Protection Act.”

The Associations emphasize that the survey has the “real potential” to result in arbitration policy based on “inaccurate data and conclusions.”

 Read more at Consumer Financial Services Law Monitor by Troutman Sanders LLP. 

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