As reported in the Daily Journal, on October 7, 2015, the U.S. Consumer Financial Protection Bureau (CFPB) announced a proposal that would bar class waivers as a way to regulate forced arbitration clauses in contracts. Lieff Cabraser attorney Elizabeth J. Cabraser commented on the issue, noting that the new CFPB proposal is “pro-consumer,” since the arbitration clauses that block group lawsuits would be banned.
“When you are forcing someone to give up their constitutional right to go to court with a grievance, there’s nothing you can do to make that all right,” stated Cabraser.
The CFPB found that companies were awarded more with the use of arbitration clauses than individual consumers, and that arbitration was generally not used to resolve the relatively small amounts usually disputed in class actions.
“What these businesses are doing is forcing a monopoly on customers before the fact,” explained Cabraser. “There is no alternative, you can’t even intelligently decide if you want to be forced out of court, because you don’t even find out about the clause until you’ve bought the product.”