The Consumer Protection Financial Bureau (CFPB) unveiled a new rule on Monday, July 10, to give consumers the option to pursue a class action lawsuit and not be bound by mandatory arbitration. This victory provides a tool for consumers to stop questionable business practices and force a company's accountability.
Arbitration clauses have been written into many consumer financial product and service agreements, ranging from bank loans, to credit cards, to cell phone contracts. The arbitration clause prevents consumers from joining together to sue the bank or financial company, and requires disputes to be resolved by privately appointed individuals called arbitrators.
Class action lawsuits are ideal for representing consumer interests against lenders, debt collectors, credit bureaus, and other businesses. For example, if a debt collector overcharges hundreds of consumers or a vehicle lender engages in unlawful repossession tactics, a class action may stop the company from profiting from illegal fees or committing other crimes against their customers.
Critics of the new rule are lobbying lawmakers to nullify it. Although Congress has already banned mandatory arbitration for mortgages and contracts involving the military, many powerful lobby groups seek to reverse the rule and block the consumer from filing class action lawsuits against banks and credit card companies. They want to streamline resolution of legal issues through arbitration, rather than pursing lawsuits through the judicial system.
Consumers Must Take Action
Write to your senators and representatives.
- State your support for the ban of mandatory arbitration.
- Explain the importance of the CFPB for all Americans.
- Emphasize that you do not want them to vote to weaken or destroy the CFPB, nor change the law that created it.
You can also use this sample letter.
Contact information for your senators and representatives: