Today, more than 50 U.S. senators and representatives sent a letter to the Consumer Financial Protection Bureau (CFPB), urging the agency to write a rule to protect consumers from the horrors of the fine print that takes away consumers’ right to seek remedies against big banks and other financial services companies in court. The letter led by U.S. Sen. Al Franken (D-Minn.) and U.S. Rep. Hank Johnson (D-Ga.) noted the evidence set forth in the “comprehensive” CFPB study, which was released in March 2015.
According to the lawmakers’ missive to CFPB Director Richard Cordray, “the study conducted by CFPB at Congress’s request roundly confirms that individuals unknowingly sign away their rights through forced arbitration agreements, which do not reduce consumer costs for financial services. Moreover, forced arbitration shields corporations from liability for abusive, anti-consumer practices, encouraging even more unscrupulous business conduct at the expense of individuals and law abiding businesses through a cycle of corporate malfeasance. Based on this substantial bedrock of evidence, we urge the CFPB to move forward quickly to use its authority under the Dodd-Frank Act to issue strong rules to prohibit the use of forced arbitration clauses in financial contracts and give consumers a meaningful choice after disputes arise.” Read the letter.
Last month, lawmakers in the Senate and House introduced two bills, the Arbitration Fairness Act of 2015 (S. 1133 and H.R. 2087) and the Court Legal Access and Student Support (CLASS) Act of 2015 (S. 1122 and H.R. 2079). The Arbitration Fairness Act, sponsored by Franken and Johnson, would make arbitration clauses in contracts unenforceable for consumer, civil rights, employment and antitrust disputes. The CLASS Act, sponsored by Sen. Dick Durbin (D-Ill.) and Rep. Maxine Waters (D-Calif.) would make arbitration clauses unenforceable in college enrollment contracts. Read this story on the CLASS Act.