The report is the latest shot in the high-stakes battle over the CFPB's rule that would restict mandatory arbitration clauses in financial contracts. The Office of the Comptroller of the Currency also has criticized the methodology the agency used to justify the rule.

Acting Comptroller Keith Noreika, an attorney who represented financial institutions before taking the new position, and CFPB Director Richard Cordray have engaged in a back-and-forth battle over the rule.

And credit unions have continued to try to convince senators that the rule should not apply to them, said Ryan Donovan, CUNA's chief advocacy officer.

“Credit unions continue to highlight to the Senate that class action litigation is not appropriate for the size and structure of credit unions.,” he said. “The CFPB did not take into account the different structure and history that credit unions have compared with the largest banks on Wall Street, Donovan added.”

NAFCU officials said they too are meeting with stakeholders and key Senators in an effort to raise awareness about the rule and its impact.

The CFPB issued the rule in July. It immediately was criticized by the financial community as a costly and unnecessary regulation. The House has passed a resolution nullifying the rule under the Congressional Review Act. But the Senate has not acted on the resolution amid concern that Republican opponents of the rule don't have the votes.

The resolution nullifying the rule only takes 51 votes in the Senate and it cannot be filibustered. Congress has 60 legislative days after a final rule is issued to block its implementation. By some accounts, that means the Senate must act by mid-November to block the arbitration rule.

As the deadline approaches, it still is unclear whether Senate Republicans have the needed votes, said John McKechnie, senior partner at Total Spectrum.

“As recently as last week, Republican Senate Leadership wasn't sure,” he said. “It will be interesting to see if the Treasury report persuades the unpersuaded.”

In a related development, Americans for Financial Reform, a group that favors the rule, announced a digital advertising campaign in states where senators have been wavering in whether to support the CFPB plan.

The group announced it would be running the ads in Maine, Alaska, Louisiana and Arizona. They feature former customers of Wells Fargo Bank who were precluded from joining lawsuits against the bank because they had signed mandatory arbitration agreements.

“Senators will be giving Wall Street and predatory lenders a brand-new get out of jail free card if they overturn the new CFPB rule restoring consumers right to hold financial companies accountable if they break the law,” said Lisa Donner, executive director of the group.

But Treasury is contending that the agency's methodology is fatally flawed. The department said that removing mandatory arbitration agreements will generate more than 3,000 additional class action suits in the next five years, at a cost of more than $500 million in legal fees paid by businesses.

In most of class action suits, consumers are provided with little relief, while plaintiff law firms are richly rewarded, Treasury said.

“The Bureau has not made a reasoned showing that increased consumer class action litigation will result in a net benefit to consumers or to the public,” Treasury concluded. “Based on the Bureau's own data, it is far more likely that the Rule will generate massive economic costs—borne by businesses and consumers alike—that dwarf the speculative benefits of the Bureau's theorized increase in compliance.”

But Gilford said that mandatory arbitration agreements help financial institutions avoid accountability.

“Our rigorous analysis of the costs and benefits of the rule found that mandatory arbitration clauses allow companies to avoid accountability for breaking the law and cost consumers billions of dollars by blocking group lawsuits,” he said. “Banks, credit unions, and other companies file class action lawsuits to pursue justice when they are harmed as a group, and our rule restores consumers' right to do the same. The Equifax and Wells Fargo cases show how important it is for consumers to be able to band together to take legal action together. This report and similar industry analyses fail to make the case for allowing companies to continue using these clauses to deny consumers their day in court.”

Donovan said the Treasury report stresses a point that CUNA has been trying to make.

“The Treasury report sheds light on the fact that the rule will 'generate massive costs borne by businesses and consumers alike,” he said' “This is particularly true for credit union members, who are directly impacted by class action litigation since the credit union member-ownership structure means resources spent on costly litigation come out of the pockets of members through the pooled resources of the membership.”

Several groups representing financial institutions also have filed suit in federal court in Texas disputing the need for the rule. Those groups, which does not include any credit unions, last week asked U.S. Circuit Judge Sidner Fitzwater of the Northern District of Texas to issue a temporary injunction blocking the CFPB from enforcing the rule.