Vail tells AGs CFPB should ban mandatory arbitration in consumer contracts
May 2nd, 2013The Consumer Financial Protection Bureau (CFPB) should ban mandatory arbitration in consumer contracts, CCL attorney John Vail told lawyers from state attorney general offices at a symposium at the George Mason University law school.
“A mandatory arbitration agreement with a class action ban is not a get out of jail free card; it’s a slip $500 to the parole board and get out of jail card,” Vail told the assembled audience, explaining that the clauses have the purpose and effect of suppressing claims.
Mandatory arbitration also undermines democratic values, Vail asserted. “We are fifty states and one federated nation, each of which made the conscious choice to vest this kind of decision-making in citizen-jurors. Mandatory arbitration transfers that power to a group of salaried elites.”
Vail emphasized that the CFPB should not hesitate to exercise the power Congress gave it to ban mandatory arbitration clauses in consumer contracts, as “Congress never intended that the Federal Arbitration Act apply to consumer contracts at all.”
The symposium brought together academics and practitioners to discuss how the CFPB might use its powers to alter the balance of power between consumers and businesses. It was sponsored by the law and economics program at GMU.
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