Bret Thompson

FOR IMMEDIATE RELEASE

December 5, 2017

CONTACTS:

Amanda Werner, Americans for Financial Reform & Public Citizen, awerner@ourfinancialsecurity.org, (202) 973-8004

Washington, DC (December 5, 2017) – Today, the U.S. Senate Banking Committee rejected an amendment to S. 2155, which would have restored consumers’ right to sue financial giants when they break the law. While other provisions in S. 2155 would reduce consumer protections and bank safety rules, Amendment 70 would have reinstated the Consumer Financial Protection Bureau (CFPB)’s arbitration rule, exempting financial institutions with less than $10 billion in assets. Democratic Senators Jon Tester (D-Mon.), Mark Warner (D-Vir.), Heidi Heitkamp (D-N.D.), and Joe Donnelly (D-Ind.) joined all Republican members of the Committee in voting against the amendment, offered by Senator Catherine Cortez Masto (D-Nev.).

Yesterday, 375 consumer, veteran, faith, and civil rights groups sent a letter to the Committee, strongly urging members to support Amendment 70 and reinstate the arbitration rule. In October, Congress passed a resolution that repealed the rule, in a narrow 50-50 tie vote broken by Vice President Mike Pence. Soon after, the American Legion and the Union Veterans Council called on President Trump to veto the resolution.

“Today, members of the Senate Banking Committee doubled-down on harming consumers, once again shielding financial giants like Equifax and Wells Fargo from the consequences of their misbehavior,” said Amanda Werner, arbitration campaign director with Americans for Financial Reform and Public Citizen. “Though Senator Cortez Masto’s amendment was tailored to address stated concerns about community banks and credit unions, a majority of this Committee chose to vote with their Wall Street donors over their constituents.”

In addition to the wide-ranging coalition of 375 groups, 423 legal scholars and academics; a united front of military groups, including the American Legion, the Military Coalition and 29 others; conservative authors and organizations, including Citizen Outreach, American Future Fund, Let Freedom Ring and Tea Party Nation; and 100,000 individual consumers expressed strong support for the CFPB arbitration rule.

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FOR IMMEDIATE RELEASE

September 8, 2017

CONTACTS:

Jan Kruse, National Consumer Law Center, jkruse@nclc.org

Amanda Werner, Public Citizen, awerner@ourfinancialsecurity.org

Equifax Could Trick Data Breach Victims into Giving Up Right to Sue

Terms of Use of Equifax’s Website Include Forced Arbitration Clause and Class Action Ban

Adding insult to injury, consumers impacted by the massive Equifax data breach who accept free credit monitoring may unknowingly sign away their right to their day in court and their right to join with hundreds of millions of other impacted consumers, according to members of the Fair Arbitration Now coalition. The Consumer Financial Protection Bureau’s new arbitration rule will prevent credit reporting agencies like Equifax from banning class action lawsuits in connection with any information provided directly to a consumer from their file, which would include information used in connection with credit monitoring or identity theft protection services.  However, the rule is not yet in effect, and Congress is threatening to block the rule.

“It is outrageous that Equifax is trying to take advantage of its own massive breach of consumers’ trust to insert ripoff clauses taking away consumers’ legal rights,” said Amanda Werner, arbitration campaign manager with Americans for Financial Reform and Public Citizen. “Now is the exact wrong time for Congress to strip consumer protections. Repealing the CFPB rule would send a clear signal to bad actors like Equifax and Wells Fargo that they can continue to plunder consumers for profit.”

“Equifax just gave 143 million reasons why Americans should tell Congress not to take away their day in court when companies like Equifax abuse their trust,” said Lauren Saunders, associate director of the National Consumer Law Center.

On Thursday – nearly two months after the data breach was discovered – Equifax announced that it had been hit with a high-tech theft of personal information for 143 million consumers, including consumers’ names, Social Security numbers, birth dates, addresses and, in some cases, driver’s license numbers and credit card numbers.  In response, Equifax has set up a website, where people can check to see if their personal information may have been stolen and sign up for one year of free credit monitoring and identity theft protection.

But the “Terms of Use” on the website force users to resolve any disputes against Equifax by “binding individual arbitration,” to waive “the ability to bring or participate in a class action, class arbitration, or other representative action.”  Instead, people would be required to bring any claim in a secretive proceeding before a private arbitrator that Equifax agrees to, and even though 143 million consumers are impacted, people would have to hire lawyers individually and pursue their claims by “individual arbitration.”

A study by the Consumer Financial Protection Bureau found that most people do not bring individual claims and only an average of 16 people a year win in arbitration; most lose and pay $7,725. According to publicly available data, just five consumers have filed arbitrations against Equifax since 2009.

“From what we can tell, Equifax has faced only one consumer arbitration every other year or so,” said Werner. “Clearly, they are not interested in giving consumers an alternate forum to resolve disputes. They simply do not want to be held accountable for wrongdoing.”

The forced arbitration clause covers “any claim, dispute, or controversy between You and Us relating in any way to Your relationship with Equifax, including but not limited to any Claim arising from or relating to this Agreement, the Products or this Site, or any information You receive from Us … The term ‘Claim’ shall have the broadest possible construction …”  Equifax FAQs say that the TrustedID arbitration clause and class action waiver do not apply to the cybersecurity incident, but it is not clear if Equifax could rely on the broad clause in the website Terms of Use.

“Equifax should resolve any doubt by completely getting rid of its forced arbitration clause and class action ban, and Congress should uphold the CFPB’s arbitration rule so that justice is not up to the company’s choice,” said Saunders.

Fair Arbitration Now is a network of more than 70 consumer, labor, legal, and community organizations.

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You can also read the letter here.

July 20, 2017

U.S. House of Representatives

Washington, DC 20515

Re: Vote NO on Congressional Review Act resolution that repeals CFPB arbitration rule

Dear Representative:

Fair Arbitration Now, a network of more than 70 consumer, labor, legal, and community

organizations, writes to urge your opposition to the filed resolution under the Congressional Review Act (CRA) that would repeal the Consumer Financial Protection Bureau’s arbitration rule. The rule restores individuals’ legal rights by limiting the use of one-sided predispute mandatory (or forced) arbitration clauses in consumer financial services contracts.  A CRA resolution to repeal the rule would send a clear message to your constituents that Congress is willing to easily dismiss their constitutional rights for the protection of Wall Street banks that break the law.

Forced arbitration clauses in financial services contracts prevent cheated or defrauded American consumers from going to court to challenge wrongdoing by big banks, credit card companies, payday lenders, and other financial institutions.  The terms are presented in take-it-or-leave-it contracts and individuals have little or no choice unless they forego financial products and services altogether, which is simply not realistic. Most arbitration clauses in the financial industry also prohibit consumers from participating in class actions.

The arbitration rule restores American consumers’ right to band together in court when harmed by systemic and widespread misconduct in the financial marketplace. In its analysis, the CFPB found that at least 160 million class members over a five-year period were eligible for relief in consumer finance class actions totaling $2.2 billion, after attorneys’ fees. The rule does not eliminate forced arbitration, but it would make individual secret arbitration more transparent by publishing arbitration complaints and outcomes.

Meanwhile, data show that forced arbitration blocks almost all relief to those harmed by illegal or abusive practices in the consumer finance market. Servicemembers, for example, have federal protections that ensure their financial wellbeing when they are on active duty. But big banks and lenders use forced arbitration to block servicemembers from enforcing their rights in court.

The notorious Wells Fargo fake-account fraud also compels your support for the arbitration rule. The fraud grew for many years affecting millions of customers until it exploded into a full blown scandal. Because of Wells Fargo’s arbitration clause and ban on class actions, courts could not address its widespread misconduct that continued for far too long.

Data also show that financial institutions that use forced arbitration and ban class actions do not offer lower prices than institutions that do not use the restrictive terms. And there is no statistically significant difference in access to credit for consumers between those institutions. Consumers saw no increase in price after Bank of America, JPMorgan Chase, Capital One, and HSBC dropped their forced arbitration clauses as a result of a court-approved settlement reached for allegations of violations of federal antitrust law. Similarly, mortgage rates did not increase after Congress banned forced arbitration in the mortgage market. Indeed, the rule will increase accountability for banks and lenders and access to remedies for harmed consumers.

It is also completely false that consumers recover more money in arbitration.  Despite all the blocks on class actions, consumers recover roughly $366 million more in class action lawsuits than arbitration per year, and 34 million more consumers get relief.   The CFPB study found that just 400 consumers per year pursue claims in arbitration, with only 16 receiving any cash relief – a total of $86,216. The average award in arbitration is higher because the types of cases are completely different; only people with large individual claims take the time and expense to pursue them in arbitration, whereas class actions are an efficient method to resolve multiple smaller claims.

We urge you to reject the CRA resolution. It is merely a mean-spirited and wasteful action to once again take away the constitutional rights of Americans that the arbitration rule rightfully restores.  If you have any questions or concerns, please contact Christine Hines, National Association of Consumer Advocates, christine@consumeradvocates.org, (202) 452-1989.

Sincerely,
Fair Arbitration Now (Organizations that support ending the predatory practice of forced

arbitration in consumer and non-bargaining employment contracts:

https://fairarbitrationnow.org/coalition/).

FOR IMMEDIATE RELEASE

July 10, 2017

CONTACTS:

Amanda Werner, Americans for Financial Reform & Public Citizen, awerner@ourfinancialsecurity.org

Jan Kruse, National Consumer Law Center, jkruse@nclc.org

Christine Hines, National Association of Consumer Advocates, christine@consumeradvocates.org

Washington, DC (July 10, 2017) – Today, the Consumer Financial Protection Bureau (CFPB) finalized its long-awaited rule to restrict the financial industry’s use of forced arbitration – a tactic Wall Street banks and predatory lenders use to block consumers from challenging illegal behavior in court. The culmination of more than five years’ work, the rule fulfills CFPB’s directive from Congress to study the impact of arbitration and ban or restrict the practice if it harms consumers.

Many banks and lenders bury “ripoff clauses” in the fine print of take-it-or-leave-it contracts to kick disputes out of public court. Instead, consumers are forced into biased and secret arbitration proceedings with no right to appeal bad decisions. These clauses often ban class action lawsuits as well, effectively blocking relief since few consumers can afford to fight small-dollar disputes by themselves. Just last week, Wells Fargo invoked arbitration clauses in legitimate account contracts to block customers from suing together over fraudulent accounts opened in their name. Advocates suggest secret arbitration also helped the bank keep its misconduct hidden for years.

The rule to limit forced arbitration was first proposed in May 2016 after the CFPB’s comprehensive 2015 study documented that the practice effectively eradicates consumer claims. While the CFPB took a more modest approach rather than banning forced arbitration outright, the rule restores consumers’ right to band together in class action lawsuits and returns much-needed transparency to individual arbitration by establishing a public record of claims and outcomes.

During the rule’s public comment period in August 2016, more than 100,000 individual consumers across the country weighed in to support the proposed rule, as well as 310 consumer, civil rights, labor, and community organizations in a coalition comment letter. The proposed rule also received enthusiastic support from over 100 members of the House and Senate, the Military Coalition representing 5.5 million servicemembers, 18 state attorneys general, and 210 law school professors.

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Statements from leading advocates are below.

STATEMENTS FROM ADVOCATES 

Americans for Financial Reform

Lisa Donner, Executive Director

“Forced arbitration deprives victims of not only their day in court, but the right to band together with other targets of corporate lawbreaking. It’s a get-out-of-jail-free card for lawbreakers. The consumer agency’s rule will stop Wall Street and predatory lenders from ripping people off with impunity, and make markets fairer and safer for ordinary Americans.”

Public Citizen

Lisa Gilbert, Vice President of Legislative Affairs

“Over the past decade, large corporations have turned fine-print clauses buried deep in their contracts into a license to steal from American consumers and cover up the evidence. The CFPB rule will right this egregious wrong by restoring consumers’ ability to enforce their most basic rights and protections in court.”

National Consumer Law Center

Lauren Saunders, Associate Director

“Forced arbitration is a get-out-of-jail-free card that lets lawbreaking banks, payday lenders and scammers avoid accountability and deny consumers their day in court.”

National Association of Consumer Advocates

Christine Hines, Legislative Director

“After many years of study and analysis, the CFPB decided correctly to act in the public’s interest by returning something to customers that banks and predatory lenders have stolen in the fine print: the right to go to court. Restoring customers’ ability to band together in class actions will ensure that American consumers are empowered to help themselves when they are cheated or ripped off by bad actors. We commend this final rule.”

Alliance for Justice

Nan Aron, President

“As consumers, many of us are frustrated by the ‘fine print’ in contracts we sign for products and services. Unfortunately, buried in this print we often find language requiring consumers to sign away important rights. Contracts can include class action bans preventing consumers from joining together to pursue a claim in court if they’re harmed by a business. This is unfair, and we applaud the Consumer Financial Protection Bureau for finalizing this rule that would stop banks and lenders from imposing these class action bans on customers.”

American Association for Justice

Julie Braman Kane, President

“Few Wall Street practices are as abusive, unfair, and deceptive as the widespread use of forced arbitration. These clauses, which are hidden in millions of contracts for financial goods and services, force consumers into a rigged, secretive system set up by powerful corporations to hide wrongdoing and evade accountability. AAJ strongly support the CFPB’s efforts to restrict the use of forced arbitration, and we are glad this final rule will soon to restore the rights of American consumers.”

FOR IMMEDIATE RELEASE
June 28, 2017

CONTACTS:
Amanda Werner, Americans for Financial Reform & Public Citizen, awerner@ourfinancialsecurity.org, (202) 973-8004
Jan Kruse, National Consumer Law Center, jkruse@nclc.org, (617) 542-8010 ext. 361

New Report Shows Need for Federal Oversight of Secret Arbitration: All Firms in Flagrant Violation of California’s Disclosure Law

A major new report released today found that private arbitration firms that decide claims against corporations accused of fraud, sexual harassment, wage theft, abuse of nursing home residents, and other illegal activity are themselves violating the law. Each firm failed to fully comply with a California law meant to bring transparency to these secret proceedings by requiring firms to disclose basic information about the claims filed and their outcomes.

The report was written by the Public Law Research Institute (PLRI) UC Hastings College of Law, which pored over records, analyzed data, and contacted arbitration firms directly as part of its investigation into whether compliance had improved since the PLRI issued its earlier report in 2013.

Key findings:
• No firm discloses all of the required information for all of its cases
• Out of 32 firms that offer arbitration services in California, only 3 provide information that is readily accessible on the home page of their website, and is searchable and sortable, as required by law
• 9 arbitration firms do not provide any data at all, and claim they are not required to comply with the law. However, at least one of those firms’ websites promotes its arbitration services as an alternative to small claims court
• The American Arbitration Association, which has closed 1021 cases in California since 2014, fails to provide required information about the prevailing party in most cases where there was a hearing and an award (reporting the prevailing party in only 46% of such cases)
• The Kaiser Office of the Independent Administrator reports 98 arbitrated cases since 2014; of those, the non-Kaiser party prevailed only 6% of the time
• Despite the greater efficiency touted by proponents of arbitration, the report notes the interval between filing and disposition of cases ranging from 150 days to more than 350 days for the major arbitration firms

“These findings demonstrate the need for strong federal oversight of these secret arbitration proceedings,” said Amanda Werner, arbitration campaign manager with Americans for Financial Reform and Public Citizen. “Without agencies enforcing strong rules, corporations can simply opt out of state law and, in fact, gain a competitive edge in the marketplace by harming consumers and workers.”

The Consumer Financial Protection Bureau proposed a rule last year that would create a public record of claims and outcomes in individual arbitration related to financial products and services, ensuring bad actors cannot hide illegal behavior in secret proceedings. The rule would also restore the right of consumers to join together in class action lawsuits by restricting some uses of forced arbitration.

“This report shows why we need the CFPB rule to lift the veil of secrecy over forced arbitration, which helps companies sweep their wrongdoing under the rug and evade our right to an impartial court,” said Lauren Saunders, associate director of the National Consumer Law Center.

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The U.S. Supreme Court on Monday decided Kindred Nursing Centers L.P. v. Clark, ruling that nursing homes can continue to force patients to arbitrate even when the patients never specifically gave their family members the power to agree to arbitration on their behalf.

“Forced arbitration is an abusive practice that has been imposed on consumers for far too long. The notion that a nursing home patient can lose her right to go to court without ever having had any say on the matter is shameful,” said Remington Gregg, Consumer and Civil Justice Counsel with Public Citizen. “This decision is another unfortunate step in the Supreme Court’s arbitration jurisprudence. It further underscores the need for regulatory protections for all nursing home patients against forced arbitration clauses – and for Congress to protect all consumers by banning forced arbitration outright.”

FOR IMMEDIATE RELEASE

May 4, 2017

CONTACTS:

Amanda Werner, Americans for Financial Reform & Public Citizen, awerner@ourfinancialsecurity.org

Christine Hines, National Association of Consumer Advocates, christine@consumeradvocates.org

Jan Kruse, National Consumer Law Center, jkruse@nclc.org

Sarah Jones, American Association for Justice, sarah.jones@justice.org

Fair Arbitration Now Coalition Urges the House to Reject Legislation Stripping Federal Agencies of Authority to Restrict Forced Arbitration

Washington, DC (May 4, 2017) – Today, the House Financial Services Committee voted to advance H.R. 10, which would roll back key provisions of the Dodd-Frank Wall Street Reform Act and block federal agencies from restoring crucial legal rights of consumers and investors. The bill now moves to the House floor. The Fair Arbitration Now coalition sent a letter urging members of the House Financial Services Committee to reject Chair Jeb Hensarling’s (R-Tex.) H.R. 10, titled the Financial CHOICE Act of 2017, ahead of the bill’s hearing last week.

Among countless irresponsible provisions to unravel landmark financial reforms, one part of H.R. 10 would strip the Consumer Financial Protection Bureau (CFPB) and the Securities and Exchange Commission (SEC) of authority to restrict the abusive practice of forced arbitration. Many financial services companies bury forced arbitration clauses in the fine print of their consumer and investor contracts to kick any dispute out of public court.

“Contrary to its title, H.R. 10 would deprive consumers and investors of any choice of their day in court when resolving serious disputes with powerful financial institutions and force them into a rigged system,” said Amanda Werner, arbitration campaign manager with Americans for Financial Reform and Public Citizen. “These ripoff clauses only serve to kill consumer class action lawsuits and cover up widespread fraud and abuse, as we saw with the Wells Fargo scandal just months ago.”

In arbitration, consumer and investor claims are decided by a private firm chosen by the company with few legal protections and a limited ability to appeal an unfavorable decision. Banks and lenders also often bar harmed consumers from joining together in class action lawsuits or even speaking publicly about the company’s wrongdoing. While the SEC has not exercised its authority to restrict or ban forced arbitration at this time, the CFPB proposed a rule last year to restore consumers’ right to join together in class actions.

“This bad bill is the wrong choice for consumers, including veterans, workers, and elders. The bill blocks the Consumer Financial Protection Bureau from finalizing a forced arbitration rule that restores our day in court when banks violate the law, as in Wells Fargo’s creation of two million fake accounts,” said Lauren Saunders, associate director of the National Consumer Law Center. “The Wrong Choice Act gives corporate wrongdoers a get-out-of-jail-free card and guts the CFPB, the consumer watchdog that holds Wall Street accountable for the types of malfeasance that led to the Great Recession.”

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FOR IMMEDIATE RELEASE

March 29, 2017

CONTACTS:

Jan Kruse, National Consumer Law Center, jkruse@nclc.org

Christine Hines, National Association of Consumer Advocates, christine@consumeradvocates.org

Laurie Kinney, Alliance for Justice, laurie.kinney@afj.org

Sarah Jones, American Association for Justice, sarah.jones@justice.org

Amanda Werner, Public Citizen, awerner@ourfinancialsecurity.org

Wells Fargo Settlement Highlights Importance of Class Actions, Dangers of Forced Arbitration

This week’s announcement of a proposed $110 million class action settlement for consumers harmed by Wells Fargo’s fraudulent bank account scheme highlights both the importance of class actions and the dangers of forced arbitration clauses in consumer contracts, according to members of the Fair Arbitration Now coalition.  Congress has been considering bills to curtail class actions, and the Consumer Financial Protection Bureau is expected to release a rule this spring to ban forced arbitration clauses that have class action bans in financial contracts.

“People harmed by massive fraud should not have to wait this long,” said Nan Aron, President of Alliance for Justice.  Customers of Wells Fargo brought class actions as early as 2013, but the bank successfully claimed that the fine print of actual account agreements prevented them from suing over the fraudulent contracts.  “Wells Fargo used forced arbitration clauses and class action bans to prevent courts from holding the bank accountable for the full breadth of the scandal, and instead forced people to go one by one into a secretive and biased process,” said Ms. Aron.

As early as this month, Wells Fargo was still trying to block several class actions and force people into individual arbitrations. Courts had not yet ruled on the bank’s request to dismiss the class actions and send the cases to individual arbitration. The settlement still needs to be approved by a court.

“This case shows how forced arbitration clauses and class action bans deny people justice. The victims of Wells Fargo’s fraud will undoubtedly get less than they would have if the bank wasn’t holding a forced arbitration hammer over their head.  There was the very real possibility that the court would have dismissed these cases entirely – not because Wells Fargo was innocent, but because of the fine print of its contracts,” said Paul Bland, Executive Director of Public Justice.

“Corporations like Wells Fargo that commit widespread wrongdoing should not get to dictate when they will participate in the civil justice system or when they will require consumers to resolve their complaints in individual secret arbitration. Consumers should have the choice to band together in court to address misconduct,” said Christine Hines, Legislative Director for National Association of Consumer Advocates.

“This announcement shows why class action rights are so necessary to our civil justice system,” said Lisa Gilbert, Vice President of Legislative Affairs for Public Citizen. “Since most consumers simply give up when forced into arbitration, these rip-off clauses give banks a license to steal without consequence.”

Wells Fargo found that its business was continuing to suffer from the scandal. This week, its regulator gave the bank a rare “needs to improve” rating under the Community Reinvestment Act.  Wells Fargo also continues to face a campaign for people to move their money out of the bank until the bank agrees to drop forced arbitration clauses in all cases.

“Settling this one case is not enough.  Wells Fargo must get rid of its forced arbitration clauses and commit not to enforcing the ones it has. The bank has engaged in a string of misconduct – from illegally repossessing cars or foreclosing on military servicemembers to using unfair and deceptive practices to increase overdraft fees – that goes far beyond this case,” said Lauren Saunders, associate director of the National Consumer Law Center.

In February, a broad-based coalition of groups called on Wells Fargo’s CEO Timothy Sloan to cease forcing its customers and workers to submit to forced arbitration.  The group unveiled a new website, WeDOCount.org, focusing on the campaign to make the switch from Wells Fargo to more consumer-friendly banks or credit unions.

“Wells Fargo will eventually put this scandal behind it, but wrongdoers will continue to block justice and deny victims their day in court until we end forced arbitration.  The Consumer Financial Protection Bureau must finalize its forced arbitration rule and Congress must pass the Arbitration Fairness Act,” said Julia Duncan, director of federal programs for the American Association for Justice.

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Image credit: Johnny Silvercloud (CC BY-SA 2.0)

Last week, lawmakers laid the groundwork for a battle over consumer rights and forced arbitration that likely will play out through the spring.

First, congressional Democrats introduced several bills to restore consumers’ right to hold corporations accountable in court for wrongdoing. Led by U.S. Sen. Al Franken (D-Minn.), lawmakers on March 7 introduced a slate of bills aimed at ending the use of forced arbitration in various sectors. Forced arbitration provisions, also known as “ripoff clauses,” block consumers from challenging illegal corporate behavior.

Lawmakers were joined at a packed press conference by people who had been harmed by forced arbitration: a veteran illegally fired from his job while serving in the military and blocked from suing his employer; a victim of Wells Fargo fraud whose class action was kicked out of court; and former news anchor Gretchen Carlson, barred from speaking out about sexual harassment she had suffered at Fox News.

Among the bills introduced were Franken’s Arbitration Fairness Act, which would prohibit forced arbitration in consumer, employment, civil rights, and antitrust cases and Sen. Sherrod Brown’s (D-Ohio) Justice for Victims of Fraud Act, which would close the “Wells Fargo loophole” by restoring consumers’ right to sue when banks open fraudulent accounts without their knowledge.

However, in stark contrast to this push to strengthen rights and restore corporate accountability, GOP lawmakers began pressing to make it harder for consumers to band together when harmed and take corporations to court.

Two days after the Franken press conference, the House passed H.R. 985, the so-called “Fairness in Class Action Litigation Act” would effectively kill class actions by imposing insurmountable requirements to file group lawsuits. This would make it nearly impossible for consumers to hold corporations accountable for illegal and abusive behavior.

Among other onerous provisions, H.R. 985 would require that each harmed person suffer the “same type and scope of injury.” Under this absurd standard, a Wells Fargo customer with two fake accounts opened in his or her name could be barred from joining together with customers who had three fraudulent accounts. The bill also would build in costly and unnecessary delays and appeals, limit plaintiffs’ choice of counsel, and drastically restrict attorneys’ fees.

Joining together in a class action often is the only chance real people have to fight back against widespread harm, including corporate fraud and scams – particularly when claims involve small amounts of money, where it would be too costly for an individual to pursue a separate claim. Class actions have also been critical vehicles for overcoming race- and gender-based discrimination and have been instrumental in achieving victories as momentous as desegregation of our schools, as was the case in Brown v. Board of Education.

Beyond protecting the rights of the disadvantaged, class actions act as a crucial check on corporate misbehavior by returning money to harmed consumers and workers. Removing the threat of class liability would encourage systemic fraud, as banks and lenders that pad their bottom lines by committing fraud would have a competitive advantage in the marketplace.

In the financial sector, the proposed CFPB arbitration rule is a major target of financial industry lobbyists precisely because it would restore the right of consumers to join class action lawsuits. According to the CFPB’s arbitration study, class actions returned $2.2 billion in cash relief to 34 million consumers from 2008-2012, not including attorneys’ fees and litigation costs. While the CFPB rule is expected to be finalized this spring, it would be rendered largely ineffective should H.R. 985 become law.

You can watch our video against H.R. 985 here and follow developments on Twitter using the hashtag, #RipoffClause.