Arbitration Study

In Section 1028(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Congress instructs the Consumer Financial Protection Bureau (the "Bureau") to study "the use of agreements providing for arbitration of any future dispute . . . in connection with the offering or providing of consumer financial products or services," and to provide a report to Congress on the same topic. This document presents the results of that study. The advantages and disadvantages of pre-dispute arbitration provisions in connection with consumer financial products or services - whether to consumers or to companies - are fiercely contested. Consumer advocates generally see pre-dispute arbitration as unfairly restricting consumer rights and remedies. Industry representatives, by contrast, generally argue that pre-dispute arbitration represents a better, more cost-effective means of resolving disputes that serves consumers well.1 With limited exceptions, however, this debate has not been informed by empirical analysis. Much of the empirical work on arbitration that has been carried out has not had a consumer financial focus. The present study is empirical, not evaluative. Although the report covers a wide range of topics, its uniform and consistent focus is on understanding the facts surrounding the resolution of consumer financial disputes - both in arbitration and in the courts - through a careful analysis of empirical evidence. Our results reflect what we believe is the most comprehensive empirical study of consumer financial arbitration carried out to date.