Protecting Consumers from Financial Fraud

This post from the Economic Policy Institute helps explain why we joined with consumer advocacy groups from across the country to support the CFPB’s rule ending forced arbitration in financial contracts.

While the House passed legislation aimed at reversing the CFPB rule, the Senate has yet to act.

Here’s more from the EPI on why ending forced arbitration is the right move for consumers:

In an average year, at least 6.8 million consumers get cash relief in class actions — compared with just 16 consumers who receive cash relief from arbitration. Consumers in class actions recover at least $440 million, compared with a grand total of $86,216 from forced arbitration. Simply put, banning consumer class actions lets big banks and financial institutions keep hundreds of millions of dollars every year that would otherwise go back to the consumers they’ve hurt.

So, banks and other financial institutions, who already have significant leverage, gain even more in forced arbitration.

Another key point: Cost.

In other words, arbitration is certainly not cheaper — especially since the average consumer ends up paying a bank or lender $7,725 in the end — and only a couple months faster. It is also important to note that the CFPB rule does not prohibit consumers from choosing arbitration; the rule merely ensures consumers are free to join a class-action lawsuit if they so choose.

It’s important that Tennessee’s Senators stand with consumers and in support of the CFPB rule.

For more on the fight for consumer protections, follow @TNCitizenAction


 

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