On July 10, 2017, the CFPB issued its final consumer finance contract arbitration rule, which does not prohibit arbitration clauses in consumer financial contracts for credit cards, bank accounts, and other financial products and services–but prohibits clauses that ban class actions. This rule issued under specific authority from Congress after the 2008-09 “great recession,” and after years of study and development by the CFPB. Among other actors who would have been affected by the rule, Wells Fargo’s controversial conduct in creating fake accounts for tens of thousands of its customers, which led to the resignation of its CEO, would have been covered by the rule.
The rule faces stiff opposition in the current Congress, where many reps are being pressured by banks, the Chamber of Commerce, and other financial firms to kill the new rule under the Congressional Review Act. That Act requires only a simple majority vote to scuttle regulations within 60 days. Consumer advocates are urging citizens who care about holding banks, payday lenders, debt collectors, etc. accountable to contact their Representatives and tell them that they don’t want these firms to be able unilaterally to deny them access to court through arbitration clauses containing class action waivers.
Some highlights of research on this issue:
- only 2% of consumers says they would consult an attorney or take legal action to resolve a small-dollar dispute
- 89% of consumers say they want the right to participate in class actions
- approximately 75% of consumers don’t know whether or not their credit card agreement contains an arbitration clause. Source.