As one senator proposed legislation to bring the Consumer Financial Protection Bureau within the Congressional appropriations process, Sen. Al Franken led a group of 57 U.S. lawmakers who urged the CFPB to issue new rules “swiftly” that would eliminate the use of forced arbitration clauses in consumer financial service contracts, which can include vehicle installment contracts.

Franken and the group that included 41 U.S. House members and 16 of his colleagues from the upper chamber insisted that forced arbitration clauses can prevent consumers from taking finance companies to court for legal relief; instead put victims of what they contend to be wrongdoing at a disadvantage.

“These clauses force individuals into private binding arbitration as a condition of buying a product or service, and are designed to stack the deck against consumers and ensure that the final outcome of forced arbitration is unreviewable by courts," the lawmakers said in a letter to CFPB director Richard Cordray that was delivered last week.

“Forced arbitration clauses — often buried deep within the fine print of financial products and service contracts — harm American consumers by depriving them of their day in court even when companies have violated the law,” they continued.

The lawmakers reiterated in their message to Cordray that Congress directed the CFPB in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) to study forced arbitration clauses and gave the CFPB express authority to issue regulations to prohibit or limit these clauses in consumer financial contracts.

Franken and his colleagues pointed out the CFPB’s comprehensive report underscored the “devastating” effects of forced arbitration on tens of millions of consumers.

The lawmakers maintained in their letter that the bureau’s study found not only that more than three in four consumers were unaware of forced arbitration clauses in their contracts, but also that consumers rarely use arbitration on an individualized basis, especially for small-dollar claims, and that there is no evidence that forced arbitration lowers costs for consumers.

“In total, the study conducted by CFPB at Congress's request roundly confirms that individuals unknowingly sign away their rights through forced arbitration agreements, which do not reduce consumer costs for financial services,” the lawmakers said. “Moreover, forced arbitration shields corporations from liability for abusive, anti-consumer practices, encouraging even more unscrupulous business conduct at the expense of individuals and law abiding businesses.

“Based on this substantial bedrock of evidence, we urge the CFPB to move forward quickly to use its authority under the Dodd-Frank Act to issue strong rules to prohibit the use of forced arbitration clauses in financial contracts and give consumers a meaningful choice after disputes arise,” they went on to say.

To see the complete letter and which lawmakers signed it, download it here.

Georgia Senator Attempts to Rein In CFPB

Sen. David Perdue, a Georgia Republican, recently introduced the Consumer Financial Protection Bureau Accountability Act of 2015. Perdue explained the legislation would make the CFPB accountable by bringing it under the Congressional appropriations process.

In March, Perdue offered a similar amendment that was included in the final 2015 budget resolution.

“The Consumer Financial Protection Bureau was spawned from the disastrous Dodd-Frank financial regulation law,” Perdue said. “Georgians sent me to Washington to help restore accountability and transparency to the federal government, and the CFPB needs a major dose of both.

“Right now, the CFPB is a rogue agency that dishes out malicious financial policy and creates new rules and regulations at whim without real Congressional oversight. The American people, through Congress, deserve a closer look at the CFPB and how its actions will impact consumers,” he continued.

“Additionally, the agency itself has failed to operate within its own budget and proven it is more concerned with preserving its own power than protecting the public,” Perdue went on to say. “Ultimately, I believe the CFPB should be eliminated, but an important first step is bringing it into the light for the American people.”

Perdue’s efforts to reform the CFPB already earned support from several consumer and taxpayer advocacy groups, including

• Georgia Bankers Association: “The CFPB makes all the consumer protection rules, and those rules set the tone for compliance examinations of every bank, regardless of bank size and regulator doing the exam. That’s why increased accountability and oversight of CFPB is so important, and we applaud Senator Perdue for his efforts to hold this consumer agency accountable,” said Joe Brannen, president and chief executive officer of the Georgia Bankers Association. "Instead of spending thousands of hours responding to inconsequential concerns that don’t pose significant consumer risks, traditional bankers’ time could be better spent on serving the needs of the families and businesses in their communities.”

• U.S. Consumer Coalition: “The CFPB represents the greatest threat to consumer choice and freedom this country has seen in a long time. With the enforcement authority of the DOJ, and the regulatory authority of the FDIC, this unaccountable agency has limitless power to impact the lives of Americans,” said Sarah Makin on behalf of the U.S. Consumer Coalition. “While there may be a role for the CFPB, we applaud Senator Perdue for working to protect consumers from the so-called consumer protector.”

• Taxpayers Protection Alliance: “Currently, the CFPB operates outside of the jurisdiction of Congress (that most agencies operate in) and continues to be appropriated by taxpayer funds without the proper Congressional oversight. This is an agency that demands scrutiny like any other federal agency and should be held accountable for their actions by moving into the proper process for Congressional appropriations,” said David Williams, president of the Taxpayers Protection Alliance. "Any federal agency operating with the use of taxpayer funds must be subject to oversight by the elected officials that represent those taxpayers in Washington.”

• Electronic Transactions Association: “ETA supports legislation that balances consumer protections with economic growth and innovation. Senator Perdue’s bill achieves this goal,” said Scott Talbott, senior vice president for government relations at the Electronic Transactions Association.