In 2015, Banks Banded Together in Class Actions While Attempting to Bar Customers From Doing The Same
Today, Congress passed a $1.8 trillion spending package to fund the U.S. government. The legislation is not perfect, but it’s worth noting happily that many proposed anti-consumer add-ons or riders, furiously pushed by the financial industry and big-business lobbyists, did not make it in the spending package. One of those failed Wall Street-driven riders would have stymied ongoing work by the Consumer Financial Protection Bureau to restore the rights of financial customers to have their day in court.
The dangerous rider first appeared in spring 2015 as an amendment to a congressional committee’s spending bill. It would have required the Bureau to re-do a three-year, comprehensive, data-driven study on the use of predispute binding arbitration clauses in consumer financial contracts. These clauses force consumers to resolve disputes with lenders out of the court system and in private arbitration proceedings.
In the fall, the Bureau issued an initial plan to eliminate the worst aspect of arbitration clauses in financial contracts: the increasingly prevalent terms that bar consumers from banding together in class actions against banks and other lenders when they break the law. If the Bureau was forced to re-do the study as the rider required, a rule-making to protect consumers would be nowhere on the horizon. What a gift to Wall Street that would have been.
It’s fair to say that in 2015 the financial industry and the big-business lobby spent a lot of time — and likely much of their lobbyists’ time in recent years — attempting to crush the Bureau’s authority to restore consumers’ rights and regulate forced arbitration clauses.
But banks and lenders also spent time this year vindicating their own rights. Read more here.