TNCA Stands Against Forced Arbitration
Tennessee Citizen Action today joined 280 other groups from around the country in supporting the Consumer Finance Protection Bureau’s (CFPB) proposed rule restricting the financial industry’s use of forced arbitration.
Here’s a press release explaining more:
281 organizations that advocate on behalf of consumers, students, civil rights, labor, small business, and more have sent a joint comment letter to the Consumer Financial Protection Bureau (CFPB), strongly supporting the agency’s proposed rule to restrict the financial industry’s use of forced arbitration – a tactic that allows Wall Street banks and predatory lenders to block consumers from challenging illegal behavior in court. Over the last three months, the rule has generated at least 100,000 supportive comments from individual consumers across the country.
Late Monday, the final day of the rule’s public comment period, the groups lauded the proposal as “a significant step forward in the ongoing fight to curb predatory practices in consumer financial products and services and to make these markets fairer and safer.” The 281 signers include national organizations along with groups from 42 states and the District of Columbia. Many of these organizations also submitted separate comment letters.
In forced arbitration, banks and lenders bury “ripoff clauses” in the fine print of take-it-or-leave-it contracts to ensure that all disputes are decided by a private firm of the financial company’s choosing, rather than by an impartial judge or jury, leaving consumers with limited ability to appeal an unfavorable decision. Most financial ripoff clauses also include class action bans that block consumers from joining together to challenge systemic abuses.
The CFPB proposed a rule to limit forced arbitration in May after its comprehensive 2015 study documented that the practice effectively eradicates consumer claims. The letter’s signers praised the rule’s provisions to “restore crucial class action rights that deter systemic abuses” by prohibiting class action bans. While the CFPB’s current proposal would not end all forms of forced arbitration, consumer advocates agree it will “bring much-needed transparency to consumer financial arbitration” by establishing a public record of claims and outcomes.
The CFPB’s proposed rule has also received enthusiastic support from over 100 members of Congress in separate House and Senate letters, 18 state attorneys general, state legislators from 14 states, and 210 law school professors.
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