Following a U.S. House vote last week, the U.S. Senate is in a position to pass a measure overturning the Consumer Financial Protection Bureau’s (CFPB) rule to prohibit class-action waivers in virtually all financial consumer-service agreements.
The CFPB announced the rule in early July and the House voted last week to overturn it.
Sen. Tim Scott (R-SC), a co-sponsor of the U.S. Senate measure to scrap the rule, said the CFPB has time and time again overreached and hurt consumers.
“Time and time again, the CFPB has overreached with misguided efforts and has actually hurt the folks it claims to want to protect," Scott told Palmetto Business Daily. "The arbitration rule is just one more example, which will end up raising consumer costs and blocking our already overloaded judicial system."
Sen. Lindsey Graham (R-SC) has not publicly indicated where he stands on the rule. His office did not respond to a request for comment from Palmetto Business Daily.
The vote in the House to overturn the rule was passed almost entirely along party lines, with only one Republican breaking ranks. All of South Carolina's Republican representatives voted for its scrapping, with Democratic Rep. Jim Clyburn (SC-6) against.
Rep. Keith Rothfus (R-PA), the lead House sponsor of the measure to overturn the CFPB rule, described the rule as "pro-trial lawyer, anti-consumer, anti-arbitration". He also cited a CFPB study that stated the average recovery for members of a class action is $32, while the average from arbitration is $5,389.
The U.S. Senate measure to overturn the rule will likely be considered in September.
Senator Scott expressed optimism that the measure will pass, telling Palmetto Business Daily that, "This rule must be struck down as soon as possible."