If the new Rule is approved, banks will no longer be able to use forced arbitration clauses to ban consumers from joining together in class action lawsuits, seen as most effective consumer option in fighting illegal practices
After an extensive new study that conclusively proved how unfair and destructive fine print “forced arbitration” clauses have been for consumers, the Consumer Financial Protection Bureau (“CFPB”) has issued a new rule forbidding banks from forcing consumers into non-trial unbalanced arbitration hearings as their only recourse when a bank has cheated them. If approved, this landmark rule will be a huge gain for consumers, who have been suffering from bank schemes and illegal manipulations without any real means to fight back.
In a Huffington Post editorial published today, Executive Director of Public Justice Paul Bland explains why this rule is such a victory for consumers: “In recent years, for example, if a bank systematically cheated 10,000 consumers in the same way, the bank could use its arbitration clause to stop those customers from going to court together. Each individual had to figure out the scam, figure out what their rights were and then spend time and money fighting the bank and its expensive lawyers. Everyone was essentially on their own.” Bland concludes, “This is a common sense rule that will go a long way in combating some of the financial industry’s worst practices.”
As Bland observes, giving the financial industry a bypass from the normal court system had horrific consequences: “Predatory lending and dishonest practices have pushed millions of people right into desperation. Far too many Americans have been tricked into taking out loans that were far more expensive than they realized.” The May 3, 2016 CFPB ruling is a tremendous step forward for consumers’ rights, issuing a clarion call to the financial industry that systematic cheating, predatory lending, and dishonest practices have a restored nemesis in class action lawsuits.
The full text of Bland’s excellent article is available at the Huffington Post.
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