The Consumer Financial Protection Bureau, a government organization created to empower and protect consumers, has announced that they will be holding a field hearing regarding arbitration on Wednesday, May 4. The event will occur less than three months after the organization announced arbitration as a top priority for the next two years. According to Chief of Staff Chris D’Angelo, arbitration was identified as a focus area because of its “extent of consumer harm” and the CFPB’s “capacity to eliminate or lessen that harm”.
CFPB studies have given reason to be wary of arbitration clauses. One of their recent studies found that over ninety percent of arbitration agreements explicitly disallow consumers to file a class action, a type of lawsuit that is extremely successful in allowing persons who could not sue individually the ability to recover class-wide damages. Seventy-five percent of consumers were not even aware that they were subject to this type of clause. This field hearing may be the Bureau’s next step towards eradicating arbitration clauses, which could result in an influx of consumer class actions.
Director Richard Cordray, who described arbitration clauses as a “free pass from being held accountable” at an October 2015 field hearing, will be speaking at the event. Joining him will be industry representatives, consumer groups, and members of the public. The hearing will be held in Albuquerque, New Mexico, and livestreamed on the CFPB’s blog at 1:00 PM EDT.