AFSA Letter: Banning Arbitration is Bad for Consumers
Today, the American Financial Services Association (AFSA) submitted a letter to the top ranking Democratic and Republican leaders on the House Judiciary Committee in opposition to legislation banning pre-dispute arbitration for servicemembers and veterans. While the bill is titled the Justice for Servicemembers Act (H.R. 2196), it would actually limit servicemembers ability to pursue justice.
AFSA strongly supports the use of arbitration as a timely, low-cost dispute resolution option for servicemembers and everyone alike. In the letter, AFSA noted that the Consumer Financial Protection Bureau’s own study on arbitration in 2015 found that:
- Arbitration is cheaper. Consumers paid an average of $206 in total fees in arbitration cases reviewed by the Bureau, compared to the several thousand dollars consumers face in attorney fees in civil court.
- Arbitration is quick. Telephone arbitrations are generally resolved within five months while in-person arbitration is generally settled within seven. Class-action settlements, on average, do not receive final court approval for 690 days, or more than two years.
- Arbitration results in higher monetary relief. The average amount received by consumers through arbitration is $5,389. The average received by consumers through class-action lawsuits is $32.
The last bullet is the most important here. The big winners of class-action lawsuits are plaintiff’s attorneys who, on average, receive millions of dollars per settled case. Consumers receive just $32.
April 12th, 2021 by Dan Bucherer