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Thursday, May 27, 2021

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Mark Budnitz

I love your proposal.

I have one suggestion that may improve the consumer’s ability to decide whether to agree to arbitration. But it has its own difficulties.

Your proposed disclosure would state that the CFPB advises the consumer not to agree to arbitration. However, there is no explanation why. And couldn’t the company include in the contract its own explanation for why the consumer should agree to arbitrate: quicker resolution, less expensive, more convenient, etc. (Of course I believe all of these explanations are phony, but that wouldn’t stop companies from making them.)

Therefore, I suggest the disclosure also include a link to a page on the CFPB website that would explain why the CFPB advises not to agree to arbitrate.

Nevertheless, my proposal would not be simple to effectuate because the CFPB would have to decide what to include in its explanation. The explanation should be short and simple, easy to understand, not be verbose, avoid legalese. The CFPB would have to decide what information is most essential. Here’s a few to choose from that occur to me right off the top: No right to appeal, no jury, the agreement may prohibit class actions, the arbitrator does not have to follow the law, the arbitrator does not have to issue written findings of fact or conclusions of law, the company chooses the arbitration service (or gives the consumer a choice of two or more), each service has its own rules (but those rules change from time to time), limited discovery (would have to explain why consumer may need discovery), who pays which costs, etc. This seems like too many already, so hard to make it short and simple.

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