Wall Street, the U.S. Chamber of Commerce and right-wing Republicans are ganging up again this week against consumers who want to hold financial institutions that rip them off accountable.
The target this time is a rule issued this week by the Consumer Financial Protection Bureau that is designed to restore the ability bank and credit card customers, as individuals or as a group, to take a financial dispute to court.
“Our new rule will restore the ability of groups of people to file or join group lawsuits. In some cases, not only will companies have to provide relief, they will also have to change their behavior moving forward,” said a statement issued by the agency. “People who would otherwise have to go it alone or give up, will be able to join with others to pursue justice and some remedy for their harm.”
However, unsurprisingly, it took less than a day for the guardians of Wall Street profiteering to attack the rule. They are the same people – like Sen. Tom Cotton, R-Ark., in the Senate and Rep. Jeb Hensarling, R-Texas, in the House – who are working to either get rid of the CFPB entirely or render it toothless.
That’s why People’s Action is launching a petition asking Congress to keep the CFPB arbitration rule and protect the ability of ordinary people to go to court against corporate wrongdoers.
Cotton announced Tuesday that he would be introducing legislation to undo the rule under the execrable Congressional Review Act, the same tool Republicans have been using since President Trump took office to undo a host of Obama-era regulations.
Quoted in The Washington Examiner, “Cotton accused the bureau of “going rogue again” and said that the rule “ignores the consumer benefits of arbitration and treats Arkansans like helpless children, incapable of making business decisions in their own best interests.”
Reuters reported that “the U.S. Chamber of Commerce is contemplating a legal challenge and Trump administration officials are also looking at ways to kill the rule.”
Many customers don’t realize that right now, if they believe their bank or credit card customer has ripped them off or otherwise harmed them, they can’t take the matter to court.
That’s because buried in the fine print of more than 50 percent of the nation’s credit card account agreements and more than 40 percent of the bank account agreements, accoording to a 2015 Consumer Financial Protection Bureau report, there’s language that says if you want to challenge wrong or unfair charges to your account, you are required to go into a binding arbitration process, rather than take the dispute to a court.
The arbitration process is rigged to favor the financial institution. When The New York Times looked at this process in 2015, it found that few customers used the arbitration process, and when they did, consumers lost roughly two-thirds of the time. The process is also explicitly designed to keep consumers with similar complaints from banding together to confront patterns of bad behavior.
Among other things, arbitration clauses shielded Wells Fargo from a class action lawsuit when its employees were creating thousands of bogus consumer accounts in order to meet sales quotas.
It’s only fair: If you steal from a bank, you’ll be brought before a judge. The same should happen if a bank steals from you – and thousands of others. That’s what the CFPB rule says.
The use of the Congressional Review Act is particularly pernicious because ff these Republicans succeed this won’t be a temporary setback. This fundamentally unfair and undemocratic practice that keeps Wall Street from being held legally accountable for its actions would be permanently locked in, because the act not only invalidates the rule but prohibits an agency from writing a similar rule in the future.
Sign this petition so Congress hears you loud and clear: Keep the CFPB arbitration rule and protect our right to challenge corporate wrongdoers in court.
Republican leaders in Congress are hell-bent on neutering the CFPB or eliminating it altogether, precisely because it takes actions like this to even the playing field for consumers going up against the financial giants.
This blog was originally published at OurFuture.org on July 13, 2017. Reprinted with permission.
About the Author: Isaiah Poole is communications director of People’s Action, and has been the editor of OurFuture.org since 2007. Previously he worked for 25 years in mainstream media, most recently at Congressional Quarterly, where he covered congressional leadership and tracked major bills through Congress. Most of his journalism experience has been in Washington as both a reporter and an editor on topics ranging from presidential politics to pop culture. His work has put him at the front lines of ideological battles between progressives and conservatives. He also served as a founding member of the Washington Association of Black Journalists and the National Lesbian and Gay Journalists Association.