WASHINGTON – More than 100 consumer, civil rights, and labor groups are calling on CFPB Director Rohit Chopra to exercise the agency’s authority to limit forced arbitration clauses, which the said are “commonly buried in the fine print of consumer financial contracts to eliminate the rights of customers seeking accountability when scammed, cheated, or defrauded by big banks.”
"Consumers need the CFPB's help combating forced arbitration clauses that take away our day in court," said Lauren Saunders, associate director at the National Consumer Law Center, in a statement. "The CFPB does important work enforcing consumer protection laws, but it cannot pursue every injustice alone. Forced arbitration must not strip consumers of access to the courts."
Previous Rule Cited
The organizations jointly noted the CFPB previously promulgated a rule limiting the use of forced arbitration and class action waivers. After the Trump administration took office, a 50-50 Senate vote struck down the rule when former Vice-President Mike Pence broke the tie in favor of allowing big banks to use forced arbitration freely, the groups added.
“The Bureau’s eventual rule in 2017, which prohibited regulated entities from using forced arbitration clauses that bar consumers from enforcing their rights by participating in class or collective actions, would have restored rights and leveled the playing field for millions of consumers,” the letter reads. “We were exceedingly disappointed that Congress voted by the narrowest of margins to disapprove the rule before it could go into effect. However, the Bureau’s statutory authority to address this widespread problem on behalf of consumers and the public interest remains and the abusive use of forced arbitration by the banking industry has only grown worse in the intervening years.
‘Public Conversation’ Called For
“The Bureau can and must exercise its authority in any number of ways that would not be substantially the same as the regulation Congress acted to nullify,” the letter continues.
The groups that have signed the letter are further urging Chopra to engage in a public conversation on how the “secret, accountability-killing practice of forced arbitration leads to greater fraud in the financial sector that affects everyday Americans’ lives.”
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