The CFPB Helps Consumers Take Banks to Court Under New Arbitration Rule

The CFPB Helps Consumers Take Banks to Court Under New Arbitration Rule

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While the future of the Consumer Financial Protection Bureau (CFPB) remains unclear under Trump's intent to repeal Dodd-Frank, the government bureau has handed down yet another ruling, this time on group arbitration. 

The ruling goes after arbitration clauses that are included in contracts consumers sign with banks and when they open accounts and credit cards.

 

"Specifically, arbitration clauses can block people from bringing or joining group lawsuits," the CFPB states, "No matter how many people are harmed by the same conduct, most arbitration clauses require people to bring claims individually against the company, outside the court system, before a private individual." 

 

While the rule isn't directly outlined in the press release, it will make it easier for groups of defendants to bring lawsuits (known as class action lawsuits) against those types of lenders, and make it easier for consumers to join group lawsuits going forward.

 

"In some cases, not only will companies have to provide relief, they will also have to change their behavior moving forward." the release continues.

 

Some banks are already pushing back, with Wells Fargo (WFC) CEO Timothy Sloan confidently stating that, "We'll see legislative or administrative and legal action against [the arbitration rule]" during an earnings call last week.

Wells Fargo was the defendant in its own class action lawsuit recently, and was required to pay $142MN to victims of their phony accounts scandal last year. The CFPB has handed down over $11.7BN in compensation to consumers since its inception during the Recession of 2008. 

You can see the whole statement here, and check out their explanation video below.

 

 

 

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One response to “The CFPB Helps Consumers Take Banks to Court Under New Arbitration Rule”

  1. At least it's fare

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