CFPB Says Consumers Should Be Allowed to Sue Banks
The Consumer Financial Protection Bureau wants consumers to be able to pursue class action lawsuits against their banks and credit card companies. The organization has proposed that mandatory arbitration clauses be removed from bank and credit card agreements.
The current clauses prevent consumers from filing class-action lawsuits, which means that individuals have to pursue complaints on their own when they experience issues with their financial services. This puts the individual consumer at odds with the much more powerful corporation. The CFPB has said most people don’t know that this practice is violating their rights.
“Signing up for a credit card or opening a bank account can often mean signing away your right to take the company to court if things go wrong,” said Richard Cordray, CFPB Director.
“Our proposal seeks comment on whether to ban this contract gotcha that effectively denies groups of consumers the right to seek justice and relief for wrongdoing.”
Under the CFPB’s new proposal, banks and credit card companies will still be able to use arbitration clauses, but consumers must be informed that they can take part in a class-action lawsuit. The CFPB will provide the exact language to be included in the arbitration clause.
The Dodd-Frank Wall Street Reform and Consumer Protection Act gave the CFPB the power to evaluate the mandatory arbitration clauses. In 2015, they released the results of their study, which found that 160 million consumers were eligible for some sort of relief, which would translate into settlements totaling $2.7 billion.