10.30.17

CONGRESS SIDES WITH BANKS AND LENDERS DESPITE KNOWN RISKS TO CONSUMERS

By: Michael C. Forrest, Esq.

Late Tuesday night, October 24, 2017, all but two Republican members of the Senate voted to kill a rule authored by the Consumer Financial Protection Bureau. The rule, which was set to go into effect, was aimed at preventing restrictive forced arbitration agreements in consumer contracts and re-opening the court system to injured consumers.

However, despite recent well-known incidents such as the Equifax data breach and Wells Fargo’s admitted intentional unlawful behavior, Vice President Mike Pence (the vice president was required to provide the tie-breaking vote) and all but two Republican members of the Senate decided that a consumer’s right to pursue his/her claims in a court should be abridged so that financial institutions can unilaterally impose often unfair arbitration procedures.

Opponents of the Consumer Financial Protection Bureau’s anti-arbitration clause rule have consistently and narrowly framed the issue as an “anti-class action” issue, while ignoring the reality that forced arbitration not only precludes a claimant’s right to collective action, but wholly eliminates a consumer’s right to his or her individual day in court. Further, the opponents of the Consumer Financial Protection Bureau’s anti-arbitration clause rule entirely ignore the well understood reality that financial institutions impose draconian conditions upon consumers before the consumer is entitled to bring his or her arbitration claim.

By siding with banks and lenders, rather than consumers, Republican members of Congress have made clear that they do not believe that an aggrieved consumer  should be permitted to fight a financial institutions injustices, and moreover, have essentially raised a flag in support of businesses over consumers; a story all too familiar over the last few years.