Group sues CFPB for not releasing rulemaking records

The conservative Cause of Action Institute is suing the Consumer Financial Protection Bureau (CFPB) for refusing to release the documents it used in drafting a rule that would ban the use of forced arbitration clauses in financial contracts.

“The purpose of the [Freedom of Information Act] is to keep government agencies like CFPB transparent so that policymakers and the public can evaluate the merits of an agency action,” the group said in its complaint filed in the U.S. District Court for the District of Columbia on Tuesday.

The rule the CFPB proposed in May keeps companies from including clauses in contracts that make it harder for consumers to sue. Forced arbitration clauses, often slipped into the fine print, bar consumers from joining class-action lawsuits or suing on their own.

{mosads}Instead, the clauses force consumers to resolve disputes on alleged abusive practices or unjustified fees, for example, through privately appointed individuals or an arbitrator — often chosen by the company.

The group said the proposed new anti-arbitration rule is likely to subject numerous financial institutions to a flood of class action lawsuits, further burdening the courts.

“To issue a regulation affecting such a vast swath of the economy, and then attempt to conceal the bulk of the documents reflecting how that decision was made from public view, violates the law and the American people’s right to know,” the John Vecchione, vice president of the Cause of Action Institute, said in a statement.

The group is asking the court to order CFPB to produce all records and the portions of records that are being withheld and force CFPB to reimburse its attorney fees.