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August 24, 2016

CFPB Anti-Arbitration Rule Will Mean 1,200 More Class Actions, $100 Million in Legal Fees Per Year

The Consumer Financial Protection Bureau’s (CFPB) anti-arbitration rule will mean “at least 1,200 additional class actions a year” filed against many of the 53,000 businesses covered by the rule, “costing more than $100 million a year in legal fees,” writes Forbes’ Daniel Fisher, citing a CFPB report.

“The CFPB agrees that companies will likely pass through some of the cost of this permanent increase in legal expense to consumers,” writes Fisher. “Plaintiff fees in federal court alone are likely to increase by $60 million a year.”

“As for the CFPB’s argument consumers need class actions to resolve small-dollar complaints,” writes Fisher, the U.S. Chamber “studied 10 days of complaints to the agency, selected at random, and found that 90% of them involved individualized issues that can’t be addressed through a class action, like incorrect information on a credit report.”

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