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CFPB to issue revised telephone survey of consumers for arbitration study

Posted in Arbitration

The CFPB will be publishing a notice in tomorrow’s Federal Register which states that the CFPB is seeking approval from the Office of Management and Budget of its plans to conduct a national telephone survey of 1,000 credit card holders as part of its study of the use of mandatory arbitration agreements in connection with the offering of consumer financial products and services.  The new notice follows the CFPB’s June 2013 notice in which it indicated it was seeking OMB approval for such a survey.  At that time, it was contemplated that after the CFPB received comments on its initial proposed survey, it would provide a 30-day period for comments on a revised proposed survey.  Accordingly, we expect the revised survey which is the subject of the new notice to be available for review by the end of this week. 

The new notice indicates that the survey will explore: (a) the role of dispute resolution provisions in consumer card acquisition decisions, and (b) consumers’ default assumptions (meaning consumers’ awareness, understanding, or knowledge without supplementation from external sources) regarding their dispute resolution rights vis-à-vis their credit card issuers, including their awareness of their ability, where applicable, to opt-out of mandatory pre-dispute arbitration agreements. 

In its prior notice, the CFPB indicated that the survey would explore “the extent of consumer awareness of dispute resolution provisions” in their credit card agreements as well as “consumers’ assessments of such provisions.”   Like the initial survey, the revised survey will not gather data regarding respondents’ post-fact satisfaction with arbitration or litigation proceedings.  While the CFPB did not previously indicate why it was not gathering such data, it states in the new notice that it is not seeking such data because of “the difficulty in finding consumers that have had personal experience with both forums.” 

In their comments submitted on the initial survey, prominent industry trade groups questioned the value and usefulness of any telephone survey.  However, both industry and consumer advocates who commented agreed that if the CFPB did proceed with its telephone survey, it needed to substantially revise the proposed survey questions.  We hope the revised survey shows that the CFPB took these comments to heart.  Assuming the new notice is published as scheduled, comments will be due on or before June 30, 2014.   

The CFPB’s arbitration study was mandated by Congress in Section 1028 of the Dodd-Frank Act.  Section 1028 also authorizes the CFPB to “prohibit or impose conditions or limitations on the use of” such agreements based on the study results.  In April 2012, the CFPB published a request for information about the scope, methodology and data sources for the study.  In December 2013, the CFPB published preliminary study results.  This past April, at the 19th Annual Consumer Financial Services Institute in Chicago (which I co-chaired), Will Wade-Gery (who is managing the study for the CFPB) indicated that the study will be completed by the end of this year.