by Jeff Sovern
The latest example is an op-ed by Dean Clancy, a former senior Republican official in Congress and the White House, in the American Banker, CFPB arbitration rule is an undeniable win for consumers. Clancy takes issue, as I did, with a recent American Banker piece by Joseph Cioffi. Clancy explains:
[Cioffi assumes] Individual arbitrations are more efficient, and therefore, less costly than class actions. The evidence for this is thin, if not nonexistent. Instead, we have some pretty good anecdotal evidence pointing the other way.
Clancy then summarizes that evidence. Clancy also writes:
To be sure, some class-action attorneys do engage in off-putting and even unethical behavior. But that problem can be managed without having to deprive people of their access to court.
Class actions serve a useful purpose and offer unique benefits. As the congressional House Liberty Caucuswrote in a statement on Facebook: “[Class actions] are a market-based solution for addressing widespread breaches of contract” and “a preferable alternative to government regulation because they impose damages only on bad actors rather than imposing compliance costs on entire industries.”