Senators and Representatives Announce Legislation to Repeal Consumer Bureau Rule that Restores Americans' Ability to Challenge Illegal Lending Actions in Court
WASHINGTON, D.C. – Today, Senate Banking Committee Chairman Mike Crapo (R-Idaho) and House Financial Services Committee Chairman Jeb Hensarling (R-Texas) announced legislation that would rescind a new Consumer Financial Protection Bureau (CFPB) rule, which restores the ability of consumers to band together in a class action lawsuit to challenge the illegal behavior of banks, payday lenders, and other financial companies. The legislation uses the Congressional Review Act (CRA), which allows Congress to repeal an agency’s rule through a simple majority vote and blocks the issuance of similar rules in the future.
Center for Responsible Lending (CRL) Senior Policy Counsel Melissa Stegman released the following statement:
Financial companies frequently bury rip-off clauses in the fine print of contracts, giving them the ability to cheat consumers with impunity. These clauses block consumers’ access to the courts and force consumers into an arbitration process rigged in favor of the company. This also makes it difficult for consumers to challenge widespread, systemic misconduct by companies since it is often too expensive to pursue small-dollar disputes one-by-one in arbitration.
The Wells Fargo scandal highlights the real harm of forced arbitration clauses, 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.
Even with limits on class actions, consumers receive approximately $366 million more in class action lawsuits than arbitration per year, and 34 million more consumers receive relief.
The CFPB rule restores the ability of all Americans, who have had money illegally taken from them by predatory lenders, to join together and have their day in court. A new poll shows that three out of four voters support the CFPB’s mission and that two out of three voters support the rule. Instead of crushing their legal rights, Members of Congress should listen to their constituents.
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.