WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) released its final rule aimed to restrict forced arbitration and improve access to our judicial system for all consumers. Across the country, fine print agreements--from financial to employment contracts--too often include arbitration clauses to strip individuals from receiving their fair day in court. These agreements often ban class action lawsuits, leaving consumers unable to challenge widespread misconduct since it is often too expensive to pursue small-dollar disputes one-by-one in arbitration.
While the CFPB did not ban all forms of forced arbitration, the rule restores consumers’ right to join together in class action lawsuits and returns transparency to individual arbitration by establishing a public record of claims and outcomes. The CFPB’s proposed arbitration rule was released last May. During the public comment period last August, CRL joined with 310 consumer, civil rights, labor, and community groups and more than 100,000 individual consumers across the country to support the proposed rule.
Center for Responsible Lending (CRL) Senior Policy Counsel Melissa Stegman released the following statement:
This rule is a pragmatic step forward to ensure there is transparency, fairness, and accountability in consumer finance. While it does not end all forced arbitration, it does return the opportunity for people to join together in court and hold companies accountable for systemic misconduct.
Last year's Wells Fargo scandal highlights the real harm forced arbitration causes, as customers who attempted to bring class action lawsuits against the bank over phony accounts were blocked from the court–-keeping the growing problem out of the public eye. Everyone should be protected from rip-off clauses buried in the fine print of customer agreements.
By continuing to fulfill its mission of protecting consumers from bad financial practices, CFPB is creating a lending climate that benefits everyone.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Matthew Kravitz at matthew.kravitz@responsiblelending.org or 202-349-1859.