Workplace Fairness statement on forced arbitration
Organization has the facts on arbitration and the May 5, 2016 CFPB ruling
SILVER SPRING, Md. (May 5, 2016) – Workplace Fairness joins dozens of consumer advocacy groups to applaud the proposed rule released by the Consumer Financial Protection Bureau (CFPB) today to restore consumers’ right to join together to hold corporations accountable when they break the law. The proposed rule would limit the financial industry’s use of forced arbitration – an abusive practice in which corporations bury “ripoff clauses” in the fine print of take-it-or-leave-it contracts to block consumers from challenging predatory practices such as hidden fees, fraud, and other illegal behavior.
In forced arbitration, consumers lose the right to argue their case before an impartial judge and jury. Instead, big banks and abusive lenders are able to hire a private arbitration firm of their choosing to decide the dispute, and consumers have little opportunity to present evidence or appeal a bad decision. Nearly all financial ripoff clauses prohibit participation in class actions and even bar consumers from talking about what happened to them — which means that the public often never learns about corporate scams or fraud.
While the CFPB’s current proposal does not end forced arbitration, it does prohibit companies from using one of the most damaging and common elements of the practice — bans on class actions. These bans prevent consumers who have suffered similar harms from joining together to take on a corporation as a group, effectively eradicating consumer claims and allowing corporations to break the law without consequence.
“The CFPB’s action does not apply in the workplace setting, as that is not within the agency’s jurisdiction. But eradicating the class action bans in other settings which affect individual working people is a key move towards eliminating this pernicious practice entirely, which prevents those impacted by illegal discriminatory practices from banding together with their coworkers to effectively challenge policies and procedures which violate employment laws. It is a critical move towards ensuring that working people can present their cases to an unbiased arbiter when their rights are violated,” said Workplace Fairness Executive Director Paula Brantner. The Workplace Fairness website (www.workplacefairness.org) educates more than three million people annually about their workplace rights, including how to stand up to forced arbitration agreements imposed by their employers.
The agency’s comprehensive study, released last year, revealed that very few consumers are able to challenge corporate fraud or abuse when forced to pursue a large company alone. By allowing consumers to once again band together to hold companies accountable, the CFPB will ensure that one of the corporate avenues for forcing consumers into individual arbitration is foreclosed.
Workplace advocates commend the CFPB for taking this crucial step to limit big banks’ and other financial companies’ efforts to escape accountability for breaking the law, and urge the agency to use the full force of its authority to restore consumers’ right to choose how to resolve disputes with financial institutions in this, and every, context in the final rule.
For more information on a multitude of topics relating to workplace rights, laws and legislation, take a look at our website, filled with over 400 pages of substantive legal information at www.workplacefairness.org.
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About Workplace Fairness
Workplace Fairness is a nonprofit organization that provides information, education and assistance to individual workers and their advocates nationwide and promotes public policies that advance employee rights.
Our goals are that workers and their advocates are educated about workplace rights and options for resolving workplace problems and those policymakers, members of the business community and the public at large view the fair treatment of workers as both good business practice and sound public policy.
Workplace Fairness works toward these goals by:
- Making comprehensive information about workers' rights – free of legal jargon – readily available to workers and to advocates and organizations that assist workers;
- Providing resources to support the work of legal services organizations, community-based organizations, law schools and private attorneys that provide free legal information and services to low-income workers;
- Presenting the employee perspective in publications, policy debates & public discussion.
The award-winning Workplace Fairness website, www.workplacefairness.org, has newly updated information throughout the site, as part of the Web's most comprehensive resource educating workers about their legal rights in the workplace.