Page 14 - GIADA-Dec 2017-Final

COMPLIANCE

Industry Celebrates Defeat of Arbitration

Ban

By Ted Craig & Jeffrey Bellant
The U.S. Senate passed a resolution that “This is good news for the American consumers. This study was mandated in
blocks the Consumer Financial Protection consumer,” said Arkansas Sen. Tom Cotton the bill that originally created the regulator.
Bureau’s arbitration ban, with Vice after the vote.
President Mike Pence casting the deciding Shaun Petersen, senior vice president of
vote to break the 50-50 Senate deadlock. “The repeal of this regulation is a good first legal & government affairs, said the CFPB’s
step toward reining in a rogue agency.” own study showed the arbitration rule
The resolution uses the Congressional would also have been bad for consumers.
Review Authority to block the CFPB’s ban Industry leaders announced the result of
on mandatory arbitration agreements in the Senate vote on the arbitration issue “Their own data suggested that consumers
inance contracts. during a recent industry event and dealers were not getting the benefit of class action
in attendance applauded the news. lawsuits,” Petersen said. “They did better
These agreements are used by finance through arbitration than class action
providers – including auto creditors and Steve Jordan, CEO of the National lawsuits.”
buy-here, pay-here dealers – to prevent Independent Automobile Dealers
consumers from joining class-action Association, said it’s a big win for the A U.S. Treasury Department study of
lawsuits. industry. the data and the CFPB’s ruling back up
Petersen’s claims.
The House already passed its version of the It was one of the issues that the NIADA
resolution. has lobbied for during its annual treks to According to the Treasury study, the CFPB’s
Washington for its Day on the Hill events. arbitration ban would have generated
There was some concern the Senate would more than 3,000 additional class action
let the rule take efect following the recent “This is monumental,” said Paul John, lawsuits over the next ive years, imposing
scandals at Wells Fargo and Equifax. executive director of the Georgia IADA. more than $500 million in additional legal
defense fees, and transferring $330 million
The vote was almost entirely along party “This is a huge win.” to plaintiffs’ lawyers.
lines, except for Republican Senators Lindsey
Graham and John Kennedy breaking ranks The ban came after the CFPB conducted The CFPB’s own data show that the vast
and voting with the Democrats. a study on the efect of arbitration on majority of class action lawsuits deliver
no relief to the class and consumers rarely
claim relief available to them, the Treasury
report stated.

“Those of us with ‘Esq.” at the end of our
name were the ones really making out in
class action suits to the tune of hundreds of
millions of dollars,” Petersen said.

The Treasury study went on to say the
CFPB did not show that its rule would
achieve a necessary increased compliance
with the federal consumer financial
laws, despite the rule’s high costs and the
regulator failed to consider alternatives to
its ban on mandatory arbitration clauses.

The legislation prevents the CFPB from
taking up the ban again. n

12 | GIADA Independent Auto Dealer DECEMBER 2017