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An Act of Congress Overturns CFPB Arbitration Rule

By Phil Lathrop
VP Auto Sales, Inc.

On Tuesday, the efforts of the TIADA and the NIADA resulted in preventing a significant threat to dealers across the nation. The Consumer Financial Protection Bureau's arbitration rule, prohibiting the use of arbitration agreements with class action waivers, 
was struck down by Congress.

In 2002, Texas dealers were drawn into a class action lawsuit, claiming we were charging interest on deferred sales tax finance contracts. The allegations were false, and the suit was dropped after dealers organized by the TIADA spent nearly a million dollars and two years fighting it. Dealers immediately started using arbitration agreements, to avoid future exposure to these type suits.

Years later, the CFPB decided to take up the issue, perceiving the agreement prevented consumers from having the collective power to sue lenders.
In 2015, I represented dealers in a daylong meeting with the CFPB. I laid out Texas dealers' experience with class action suits and how the elimination of arbitration agreements made us targets for tort attorneys.

The CFPB's own statistics showed in a four-year span, class action suits earned attorneys' firms $40 million dollars and consumers received $32 apiece. Regardless, in 2017, the CFPB ruled the agreements were to be eliminated.

However, this week the United States Senate voted 51-50 to overturn the CFPB's ruling with Vice President Mike Pence casting the tiebreaking vote. The U.S. House of Representatives had already voted on an identical resolution earlier this summer. The legislation now heads to the desk of President Trump who has indicated he will sign it.

It took an act of Congress, but we can continue to use arbitration agreements.

TIADA has got your back, keep your membership current, and tell others to join.

Read More - NIADA Applauds Senate Action on Arbitration Rule

Phil Lathrop served as the 2016 TIADA President.
 

Comments

 
By: Ryan Winkelmann
On: 11/04/2017 19:55:51
Way to go!

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