On September 29, the U.S. Chamber of Commerce, American Bankers’ Association, American Financial Services Association, Consumer Bankers Association, Financial Services Roundtable, and a number of other trade groups sued the CFPB and its director Richard Cordray. The suit alleges that the rule is invalid for four reasons:
That the rulemaking process violated the Administrative Procedure
applied defective methodologies, misapprehended the relevant data, and failed to address key considerations.”
or consumer welfare: it precludes the use of a dispute resolution mechanism that generally
benefits consumers (i.e., arbitration) in favor of one that typically does not (i.e., class-action
There has been speculation in recent days that the Senate may soon vote to repeal the rule under the Congressional Review Act. However, the Senate may not be able to act as soon as was initially thought. Those with apparent inside knowledge of the suit have told Bloomberg that it will be withdrawn if the Senate successfully repeals the rule. The suit comes on the heels of a report from the Office of the Comptroller of the Currency that estimated that if the rule were to come into effect, it would increase the cost of credit for consumers by 25 percent. The lawsuit asks for the rule to be thrown out before its effective compliance date of March 19, 2018.