Consumers Should be Able to Sue Banks, Credit Card Companies, Mortgage Originators, Says CFPB
The Consumer Financial Protection Bureau, a federal consumer protection agency, is considering rules to prohibit financial services companies from requiring consumers to arbitrate disputes. If the regulation is implemented, it would instead allow consumers to have their day in court, rather than be relegated to confidential and pro-business private mediation companies.
“Consumers should not be asked to sign away their legal rights when they open a bank account or credit card,” said CFPB Director Richard Cordray. “Companies are using the arbitration clause as a free pass to sidestep the courts and avoid accountability for wrongdoing. The proposals under consideration would ban arbitration clauses that block group lawsuits so that consumers can take companies to court to seek the relief they deserve.”
Presently, most credit card agreements, student loans, and even some mortgages allow banks to require mediation if there is a disagreement about the way an account has been handled. These often prohibit class-actions, which are a vital way for large numbers of consumers to get relief if they cannot afford a lawyer.
The CFPB’s press release is here: CFPB Considers Proposal to Ban Arbitration Clauses that Allow Companies to Avoid Accountability to Their Customers