CFPB’s long-awaited arbitration rule may be a short-lived victory for consumers
Athletes have had a good reason to hold on Monday after the Consumer Protection Office, after years of preparation, has issued a rule blocking credit card companies, banks and other financial institutions to put obstacles in Path of participation in class procedures. This is a big problem.
But the party will not last.
It is almost certain that Republican lawmakers who control the House and Senate move swiftly to reverse the rule as part of their ongoing efforts to paralyze the consumer advocacy agency and create a more favorable regulatory environment for business.
Because God forbids, consumers really have the power to restrain large companies for unfair or unethical practices.
The CFPB was authorized by the 2010 law that created the office of the Wall Street Reform and Consumer Protection Act Dodd-Frank to investigate the use of arbitration clauses in financial products and services.
These are the terms of service provision that usually require that all disputes will be resolved through arbitration and prevent consumers from filing lawsuits or joining in class actions.
Dodd-Frank says that the CFPB “may prohibit or impose conditions or limitations on the use” of arbitration clauses if it is determined that the restriction of such provisions “in the public interest and for the protection of consumers.”
On Monday, the office has done just that.
“Arbitration clauses in product contracts such as bank accounts and credit cards make it almost impossible for people to take companies to court when things go wrong,” CFPB director Richard Cordray said in a statement.
“These clauses allow companies to avoid accountability by blocking mass trials and forcing people to go alone or resign,” he said. “Our new rule will prevent companies from circumventing the courts and to ensure that people who suffer injuries can work together.”
New CFPB Arbitration Rule: Equipment
Look at how the new rule that prohibits CFPB mandatory arbitration clauses denying groups of people from their day in court.
Christine Hines, legislative director of the National Association. Consumer advocates said the CFPB does not address Republican lawmakers who have insisted for years that the agency is a rabid regulatory pit bull that needs a short or short trip on a farm.
“The agency should continue to do its job,” he said, “even if there are very anti-consumer power people.”
Other consumer advocates have echoed this sentiment.
“The rule will help fight against the culture of companies that benefit from charging illegal fees and committing other crimes against their customers,” said Rohit Chopra, a senior member of the Consumer Federation of America.