Watchdog Gives Consumers Back the Right to Sue Banks & Corporations

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Watchdog Gives Consumers Back the Right to Sue Banks & Corporations

May 6th, 2016

Awake Goy

Susanne.Posel-Headline.News.Official- cfpb.arbitration.banks.lawsuits_occupycorporatism Susanne Posel ,Chief Editor Occupy Corporatism | Media Spokesperson, HEALTH MAX Brands

The Consumer Financial Protection Bureau (CFPB) has introduced a highly anticipated change that would single out arbitration clauses in contracts giving consumers their rights to sue the corporation back.

The arbitration clause in most contracts is sometimes hidden in the fine-print of a contract between consumers and corporations that prohibits the participation in a lawsuit or class action complaint brought against the company for wrong doing.

Richard Corday, director for the CFPB explained that banks “and financial companies avoid accountability by putting arbitration clauses in their contracts that block groups of their customers from suing them.”

Corday spoke at a hearing in New Mexico in order to give consumers and advocates the chance to voice their opinions.

In response, Nan Aron, president for the Alliance For Justice (AFJ) said this “proposed rule … is an enormous step forward toward restoring the right to band together with others who have been harmed to redress grievances through the courts.”

While the CFPB is not doing away with arbitration clauses, it is asserting that companies cannot use that loophole to get out of lawsuits filed against them. In addition, the CFPB is intending to educate consumers on what will happen to them should they go through with arbitration.

This loophole has assisted the financial industry in avoiding 10s of millions of consumers who would have filed a lawsuit, but were bound to arbitration. In fact, 75% of consumers are unaware that this clause is part of their contract which leads to fewer challenges in small claims court, or larger district courts.

Back in 2015 the CFPB first announced their consideration for banning banks and other financial institutions from forcing arbitration instead of allowing customers to sue in order to deflect class-action lawsuits which have huge payouts.

According to Pew Research, 66% of checking account agreements have mandatory arbitration clauses, 98% have restrictions waving customer right to a jury trial, and 32% require customers to pay for arbitration and other expenses.

Part of the problem is the bank’s allowance to choose a private arbitrator which is approved by the banker, not the customer. Because the decisions of the arbitrator are final and not reviewable, the favor is with the banks.

Banks, credit card corporations, and student loan institutions include an arbitration clause in their contracts to circumvent the potential that customers could take them to court.

These clauses traditionally bar customers from joining class-action lawsuits against the bank; forcing them into arbitration.

To help the banking industry force arbitration, the US Supreme Court ruled 3 years ago that corporations have the right to set their own rules in order to resolve disputes with customers; as well as limit the amount of class-action lawsuits that could be filed against them.

This case neglected to address the fact that forced arbitration “improperly limits customer’s options and potential recovery.”