In the recent debate over arbitration, businesses and consumer groups have argued over the question of who stands to gain from the Consumer Financial Protection Bureau's (CFPB) proposed ban on contract clauses that prevent class actions. For companies and their industry groups, there is a clear answer: plaintiffs' attorneys, not consumers.

Alan Kaplinsky, a Ballard Spahr partner who professed to have "pioneered the use of class action waivers about 15 years ago," argues that arbitration allows consumers to resolve a dispute within months, compared with waiting years for court. "The truth is, the people who have gone through arbitration actually like it, and they do better than they do in court," Kaplinsky says.

Under the CFPB's proposal, companies could still use arbitration clauses as long as they explicitly state that the terms do not prevent consumers from filing class actions. However, Kaplinsky states that many companies will no longer subsidize arbitrations if they have to reserve money for court costs: "It's a de facto ban. Let's call it what it is."


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