In May, the Consumer Financial Protection Bureau proposed new rules for financial services companies that could severely limit their ability to sidestep legal liability by forcing wronged customers out of the courtroom and into the byzantine, unfair world of binding arbitration. Some in Congress recently tacked on some legislative pork to an appropriations bill that would prevent the CFPB from moving forward on these rules, but today more than 100 federal lawmakers came out to commend the Bureau for its efforts.
In separate letters sent by members of the House [PDF] and Senate [PDF] to CFPB Director Richard Cordray in support of the pending rules.
READ MORE: 87 Companies that are using arbitration to take away your right to sue.
The CFPB proposal is not an outright ban on arbitration clauses. Instead, affected financial and credit services would only be able to use arbitration clauses if they do not also include a ban on class actions.
“There is overwhelming evidence that class-action waivers in financial products and services agreements undermine the public interest,” reads the letter signed by Rep. Maxine Waters (CA), Rep. John Conyers Jr. (MI), and 63 other members of Congress. “By restricting class actions and class-wide arbitration in consumer contracts, these clauses enable corporations to avoid public scrutiny by precluding access to the courts… As the Bureau’s research has shown, consumers rarely use arbitration to recover small claims, such as those associated with overdraft fees, because these cases are either too costly for consumers to pursue on an individual basis, or the individual consumer is unaware of a corporation’s misconduct.”
The Senate letter, signed by Sen. Al Franken (MN), Sen. Harry Reid (NV) and 36 additional senators, focuses in part on the apparent imbalance in the outcomes of financial arbitration cases. According to the CFPB’s multi-year study of the issue, when the consumer has the affirmative claim against the company the consumer rarely wins in arbitration. Conversely, when it’s the company with the affirmative claim or counterclaim, the company prevails the majority of the time.
“Despite this obvious disparity, consumers can rarely appeal forced arbitration decisions if they feel the arbitrator got it wrong,” notes the letter. “From 2010 to 2012, the CFPB found evidence of only four consumer appeals, and no company appeals.”
The senators also question why so few arbitrators do such a large portion of the arbitrating for financial service disputes.
“[This] suggests that companies using the arbitration process seek out repeat arbitrators who may have a strong financial incentive to rule in favor of the company that repeatedly hires them,” reads the letter.
Today’s letters were applauded by consumer advocates who have long pushed for limitations on the use of arbitration clauses in consumer contracts.
“These strong statements from more than 100 members of Congress reflect the mounting public outrage over forced arbitration,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division. “As advocates drag this abusive practice out of the shadows, the American people are demanding action to curb corporate scams that threaten our most fundamental rights.”
This sentiment was echoed by Lauren Saunders, Associate Director at the National Consumer Law Center.
“Fine print clauses give corporate lawbreakers a get-out-of-jail-free card, denying people access to the courts and forcing them into a secretive, biased and lawless forced arbitration,” said Saunders. “It makes a strong statement that more than 100 of our elected leaders back the CFPB to restore our constitutional right.”
In addition to Franken and Reid, the Senate letter was signed by:
Patrick Leahy (VT)
Sherrod Brown (OH)
Ed Markey (MA)
Mazie Hirono (HI)
Ron Wyden (OR)
Bernard Sanders (VT)
Tom Udall (NM)
Elizabeth Warren (MA)
Kirsten Gillibrand (NY)
Richard Blumenthal (CT)
Robert Menendez (NJ)
Tammy Baldwin (WI)
Patty Murray (WA)
Sheldon Whitehouse (RI)
Barbara Boxer (CA)
Jeff Merkley (OR)
Charles Schumer (NY)
Dick Durbin (IL)
Jack Reed (RI)
Dianne Feinstein (CA)
Heidi Heitkamp (ND)
Brian Schatz (HI)
Claire McCaskill (MO)
Cory Booker (NJ)
Debbie Stabenow (MI)
Barbara Mikulski (MD)
Bob Casey (PA)
Maria Cantwell (WA)
Mark Warner (VA)
Chris Coons (DE)
Amy Klobuchar (MN)
Tim Kaine (VA)
Martin Heinrich (NM)
Ben Cardin (MD)
Jeanne Shaheen (NH)
Michael Bennet (CO)
In addition to Waters and Conyers, the House letter was signed by:
Henry C. “Hank” Johnson, Jr.
Gregory W. Meeks
José E. Serrano
Elijah E. Cummings
Sheila Jackson Lee
Gwen Moore
Brad Sherman
David N. Cicilline
Rubén Hinojosa
Keith Ellison
Barbara Lee
Carolyn B. Maloney
Nydia M. Velázquez
Emanuel Cleaver, II
Peter J. Visclosky
Al Green
Jan Schakowsky
Stephen F. Lynch
André Carson
Ted Deutch
Luis V. Gutiérrez
Steve Cohen
Jerrold Nadler
Eleanor Holmes Norton
Danny K. Davis
Terri Sewell
Earl Blumenauer
Debbie Wasserman Schultz
Bill Foster
Bobby Scott
Zoe Lofgren
Ed Perlmutter
Michael E. Capuano
Matthew A. Cartwright
Tim Ryan
Raúl M. Grijalva
Tulsi Gabbard
Hakeem S. Jeffries
Jared Huffman
Michael M. Honda
Lois Frankel
Donald M. Payne, Jr.
Alan Lowenthal
Patrick Murphy
Daniel J. Kildee
Cedric L. Richmond
Karen Bass
Denny Heck
Donald S. Beyer, Jr.
James P. McGovern
Gerald E. Connolly
William Lacy Clay
Judy Chu
Paul D. Tonko
Robert A. Brady
Eric Swalwell
Suzanne Bonamici
Peter Welch
Mark Takano
Bonnie Watson Coleman
Suzan K. DelBene
John Garamendi
Diana DeGette
by Chris Morran via Consumerist
No comments:
Post a Comment