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New Poll: Overwhelming Support for CFPB Arbitration Rule in Arizona and Maine

Arizona and Maine’s Senators Could Cast Deciding Votes to Maintain Our Rights to Our Day in Court  

A new Public Policy Polling survey finds broad and overwhelming support in Maine and Arizona for the Consumer Financial Protection Bureau’s (CFPB) recent rule limiting banks and large corporations like Equifax from using forced arbitration to deny consumers the right to their day in court.

80 percent of Maine voters and 81 percent of Arizona voters support the “forced arbitration” rule to end the use of fine-print “ripoff clauses.” The rule empowers consumers to join together in class action lawsuits taken before a judge or jury rather than being forced into an individual, secretive arbitration process where disputes are decided by an arbitrator approved by the bank or large corporation.

“It’s not surprising to see a rule to maintain access to the courts cut across party lines,” said Tom Cox, staff attorney at the National Consumer Law Center and Maine resident. “Clearly, Maine voters want our Senators to to ensure victims of fraud and wrongdoing have their day in court, and we are hopeful that they will do that.”

As Senators consider whether to roll back the forced arbitration rule, about two-thirds of respondents in Maine and Arizona oppose that action, which is wide-ranging across the political spectrum, including majorities of Democrats, independents, and Republicans. In July, the House voted to strike down the rule but our Senators can still save this crucial rule.

Earlier this month, a group of 423 leading law school, university, and college professors in all 50 states urged the Senate to uphold the Constitution and preserve Americans’ rights to their day in court in a letter opposing efforts to block the Consumer Financial Protection Bureau’s new arbitration rule.   

“The Consumer Financial Protection Bureau rule on mandatory arbitration clauses should help to prevent a situation like the Equifax and Wells Fargo debacles from happening again,” said David P. Cluchey, an emeritus professor of law at the University of Maine School of Law in Portland. “Let’s hope that our Senators, Susan Collins and Angus King, will stand up for all of us and oppose this effort.”

“Companies bury forced arbitration clauses in the fine print of their contracts because they know that Americans would be outraged if they knew that ‘I agree’ means they are giving up their constitutional right of access to the courts,” said Michael J. Saks, Regents Professor, Sandra Day O’Connor College of Law and Department of Psychology at Arizona State University.

The Public Policy Polling results are consistent with national polling conducted by the conservative political action committee, American Future Fund (AFF). Initially, 67 percent of respondents indicated support for the rule, but when told Equifax had used forced arbitration clauses to limit consumer access to the legal system, the share of those supporting the rule rose to 75 percent.

“The Senate, armed with lessons learned from the Equifax and Wells Fargo scandals, must put the interests of active-duty servicemembers, veterans, and American consumers ahead of Wall Street lobbyists and reject efforts to take away our day in court,” said Colonel Lee Lange, USMC retired, president of the Arizona Chapter of the Military Officers Association of America.

The overwhelming majority of Maine and Arizona voters are joined by leading bipartisan voices in support of the CFPB arbitration rule, including the American Legion, The Military Coalition, Dean Clancy, the former vice president for public policy at FreedomWorks, and Tea Party Nation founder Judd Phillips.

Additional resources:

Issue Brief: Credit Reports and Forced Arbitration: Will Congress Strip Americans of Their Day in Court?

Maine Fact Sheet: Forced Arbitration Harms Consumers, Servicemembers, and Veterans

Arizona Fact Sheet: Forced Arbitration Harms Consumers, Servicemembers, and Veterans

Maine Fact Sheet: How the CFPB’s Arbitration Rule Protects Victims of Wells Fargo Bank Fraud

Arizona Fact Sheet: How the CFPB’s Arbitration Rule Protects Victims of Wells Fargo Bank Fraud

Servicemembers, Veterans, and Forced Arbitration: How the New Consumer Protection Financial Bureau Rule Enhances the Military Lending Act

The Consumer Financial Protection Bureau’s (CFPB) new arbitration rule will promote accountability and transparency for a wide variety of consumer financial products and services offered to servicemembers and veterans. The rule allows people to band together in court and prevents companies from using fine print to take away access to the courts through forced arbitration clauses with class action bans.

The CFPB rule has the strong support of The Military Coalition, representing 5.5 million servicemembers, The American Legion, 29 military groups, and leading veterans.

The Military Lending Act (MLA) already bans forced arbitration of certain disputes. So what does the CFPB add to the arbitration ban in the MLA?

The CFPB rule provides essential protection for our military families and veterans (the MLA only applies to servicemembers) and covers a broader range of financial products. For example, unlike the MLA, the CFPB rule covers these areas:

  • Purchase money loans, such as auto loans;
  • Credit monitoring and other credit reporting services;
  • Bank accounts, prepaid cards, and other noncredit accounts
  • Loans before military service, such as a credit card that a servicemember still uses;
  • Debt collectors and debt buyers pursuing debt not covered by the MLA; and
  • Home equity lines of credit.

The MLA provides no protection in these situations that ARE covered by the CFPB rule:

  • Credit bureau giant Equifax’s initial effort to block victims of its massive data breach from access to the courts through a forced arbitration clause hidden on the website for the free credit monitoring it is offering.
  • Wells Fargo’s use of older bank account and credit card agreements to block lawsuits over the theft of consumers’ identity used to open fake accounts.
  • Banks’ rampant violation of the Servicemembers Civil Relief Act through illegal repossession of cars while servicemembers are away on active duty, as happened to Sergeant Charles Beard and Sergeant Jin Nakamura. Beard’s attempt to bring a class action was thrown out due to a fine-print arbitration clause.
  • Army soldier Prentice Martin-Bowen, who sued a buy-here-pay-here used car dealer that repossessed his car despite on-time payments, and kept two trade-in cars and the down payment. Martin-Bowen was forced into arbitration and won a small amount, but he couldn’t pay his lawyer a penny in fees and he couldn’t bring a class action to help the 100 others who suffered the same result. The arbitrator admitted that a jury would likely have awarded more.
  • Wells Fargo’s illegal padding of auto loan payments with duplicative car insurance, including for servicemembers on active duty. Some contracts had arbitration clauses.
  • TransUnion’sreckless mismatching of consumers, including active duty servicemembers serving abroad, to people with similar names on a government watch list of suspected terrorists and drug traffickers. TransUnion did not have an arbitration clause in that case, and a jury ordered it to pay $60 million ($7,337 to each class member), but the company has tried in the past to trick people into giving up their day in court.
  • Army veteran Joshua Hause, who was given “no choice” and was forced to convert his existing payday loan to a 279% open-end “flex” loan that “I’ll never get out of.” A class action lawsuit over these practices was thrown out of court due to a forced arbitration clause.

Four of the five top areas of servicemember complaints to the CFPB are not covered by the MLA. And credit cards are covered by the MLA only if they are opened by active duty servicemembers after October 3, 2017 and only while the member continues to serve.

servicemembers complaints

Our men and women in uniform fight to protect our constitutional rights, including our day in court guaranteed by the Seventh Amendment. Congress must not strip away the rights of our military by repealing the Consumer Financial Protection Bureau’s arbitration rule.

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On Anniversary of 7th Amendment, More than 400 Professors in All 50 States Urge Congress Not to Take Away Our Day in Court

Letter Opposes Effort to Block Consumer Financial Protection Bureau Rule that Restores Access to the Courts Eliminated through Fine Print Forced Arbitration Clauses

On the anniversary of Congress’s passage of the Seventh Amendment to the U.S. Constitution in 1789, a group of 423 leading law school, university, and college professors from all 50 states urged Senators to uphold the Constitution and preserve consumer’s rights to their day in court, in a letter sent to the U.S. Senate opposing efforts to block the Consumer Financial Protection Bureau’s new arbitration rule.

“Class action lawsuits are an important means of protecting consumers harmed by violations of federal or state law. Class actions enable a court to see that a company’s violations are widespread and to order appropriate relief…. Individual arbitrations are not a realistic substitute for class actions… The U.S. legal system depends on private enforcement of rights,” the professors wrote.

“The right of access to the courts was so important to our Founders that they enshrined the right to a jury trial in both the Sixth and Seventh Amendments,” explained Professor Imre Szalai, the Judge John D. Wessel Distinguished Professor of Social Justice at Loyola University New Orleans College of Law.

“Equifax’s massive data breach and the company’s effort to force people to give up their day in court are strong reminders of why Congress should not take away our 7th Amendment rights,” said Creola Johnson, the President’s Club Professor of Law at the Ohio State University Moritz College of Law.

“143 million Americans were impacted by the Equifax data breach, making it unrealistic for them to get relief if they are forced to bring claims alone, one-by-one, in individual arbitrations,” said David Cluchey, Professor of Law Emeritus at the University of Maine School of Law in Portland.

Citing the CFPB’s study of class actions and arbitration in consumer financial cases, the letter notes that “over five years, 160 million class members were awarded $2.2 billion in relief – after deducting attorneys’ fees.” In contrast, in arbitration, “an average of only 16 consumers per year received relief from affirmative claims and another 23 received relief through counterclaims.”

“As a scholar, I’m offended by the false claims by lobbyists that the average person wins $5,389 in arbitration,” said Professor Jean Sternlight, Saltman Professor of Law and Director of the Saltman Center for Conflict Resolution, University of Nevada, Las Vegas Boyd School of Law. “That number is based on only 16 people a year who pursued and won in arbitration. The vast majority of people won’t even pursue a claim against a big corporation alone and will get nothing if they can’t participate in a class action.” And, added Sternlight, “in the very rare situation when consumers file arbitration claims against companies, they rarely win.”

The letter concludes, “We believe it is vital that Congress not deprive injured consumers of the right to group together to have their day in court or block important research into the arbitration process.”

The CFPB’s arbitration rule prevents contracts for bank accounts, credit monitoring, payday loans, and other financial products from prohibiting people from suing or joining class actions and instead forcing them to pursue claims before a private arbitrator agreed upon by the company. But a resolution to block the rule has passed the U.S. House of Representatives and is now before the Senate.

The letter was sent to Senator Mike Crapo (R-ID), chair of the Senate Committee on Banking, Housing, and Urban Affairs, and Senator Sherrod Brown (D-OH), the committee’s ranking member, on September 25, 2017, the 228th anniversary of Congress’s passage of the Seventh Amendment, which states: “In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law.”

Credit Reports and Forced Arbitration: Will Congress Strip Americans of Their Day in Court?

Credit Reports and Forced Arbitration: Will Congress Strip Americans of Their Day in Court?

Equifax was slow to alert the public to the data breach exposing the sensitive personal information of 143 million Americans. But the company was quick to protect itself by attempting to take away our day in court. Buried in the fine print of the website it set up to offer free credit monitoring was a forced arbitration clause and class action ban. The terms purported to apply to any controversy “relating in any way to Your relationship with Equifax” and to be interpreted in “the broadest possible” manner. Equifax eventually relented and removed the clause under intense pressure. But other credit reporting agencies also use “ripoff clauses,” and Equifax continues to do so for other products.

That is why Congress must reject efforts by Equifax and big bank lobbyists to block the new Consumer Financial Protection Bureau (CFPB) rule that restores Americans’ day in court when big credit bureaus, Wall Street banks, and predatory lenders violate the law.

The CFPB rule restores Americans’ day in court, holds companies accountable when they violate the law, and brings transparency to the secretive arbitration process. It prohibits the fine print of financial contracts from having forced arbitration clauses that bar thousands or millions of consumers from banding together in court to address widespread wrongdoing. The rule applies to companies providing credit reports, credit scores, credit monitoring and other services provided to consumers based on information in the consumer’s file.Beyond Equifax, the two other big credit bureaus also include forced arbitration clauses with class action bans in their products. For example, rip-off clauses can be found in:

A court of appeals found that TransUnion’s website “actively misleads consumers” into thinking that clicking “I agree” merely authorized TransUnion to obtain the person’s information, not to bind them to a forced arbitration clause.

Numerous problems with credit reporting companies include:

Access to the courts is critical for credit reporting problems. A jury recently ordered TransUnion to pay $60 million to 8,185 people – including active duty servicemembers serving abroad – who were carelessly mismatched with persons with similar names on a government watch list of suspected terrorists and drug traffickers.

Credit reporting is consistently a top subject of complaints to the CFPB.

CONSUMER COMPLAINT VOLUME BY PRODUCT HANDLED BY CFPB IN 2016

equifax data breach chart

Source: CFPB (August 2017)

The CFPB’s arbitration rule gives Americans back their constitutional right to their day in court when credit reporting companies violate the law. The rule protects our rights so they don’t depend on the whims of big companies or the pressure of intense media scrutiny.

But Equifax and bank lobbyists are urging Congress to block the rule. The House voted to strike down the rule and protect bad corporate actors. It is now up to the Senate.

The arbitration rule has broad, bipartisan support. Almost 9 in 10 consumers polled want the choice to participate in a class action. The Military Coalition, representing 5.5 million servicemembers, and 310 consumer, civil rights, labor, and small business groups support the rule. Polling by the American Future Fund, a conservative super political action committee, found support from two-thirds of voters in Alaska, Louisiana, Maine, and Ohio. Leading conservative voices supporting the rule include theAmerican Legion, Dean Clancy, the former vice president for public policy at FreedomWorks, and Tea Party Nation founder Judd Phillips.

Our Founders fought hard to ensure that Americans would have access to a robust system of legal justice. The Senate must not do the bidding of Equifax and Wall Street banks by taking away Americans’ day in court.

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