With Final Forced Arbitration Rule, the CFPB Continues to Advance the Public Interest

by Thomas McGarity | July 13, 2017

Earlier this week, the Consumer Financial Protection Bureau (CFPB) took decisive action to protect hardworking people who are cheated by banks or other financial institutions. Specifically, the federal agency issued a rule limiting what are known as "forced arbitration" agreements in the contracts we must all sign when we open a bank account or purchase certain kinds of financial products and services. Last year, scholars and staff at the Center for Progressive Reform authored a report that supported CFPB's efforts and asked the agency to adopt an even stronger set of protections for consumers. Although the agency did not adopt the stronger provisions, the final rule nevertheless offers crucial protections for American consumers. We are therefore concerned about the rule's ultimate fate in the courts and in Congress. 

Unbeknownst to most Americans, nearly all financial contracts include a clause that requires them to enter into arbitration if they believe they have been cheated by their bank or financial institution and want to do something about it. These contracts also prevent a consumer from joining a class action with thousands of others who have been cheated in the same way at the same time. In general, arbitration is a bad deal compared to the courts. As our report explained, the arbitration process is full of barriers that discourage people from bringing claims, is heavily rigged to favor corporate parties, and, in the very unlikely event that the consumer does manage to ...

It's Time to Give Customers of Financial Services and Products Their Day in Court

by James Goodwin | October 10, 2016
Originally published by the Oxford Business Law Blog. Reprinted with permission. Forced arbitration clauses are now almost impossible to avoid in consumer contracts for financial services and products ranging from credit cards to private student loans. Despite their ubiquity, most consumers aren't even aware of them. This is because companies frequently bury them deep in the lengthy fine print of their contracts, which they then offer to consumers on a 'take it or leave it' basis. Forced arbitration clauses warrant ...

Comments from CPR: Forced Arbitration Proposal Is Strong but Should Be Stronger

by James Goodwin | August 23, 2016
Yesterday, several CPR Member Scholars and staff formally submitted comments on the Consumer Financial Protection Bureau's (CFPB) proposed rule to limit the use of forced arbitration agreements in consumer contracts for financial products like credit cards and bank accounts.  CPR Member Scholars and staff have been tracking this rulemaking for over a year and in May 2016 published a report that assessed several key issues shortly before the CFPB released its proposal. In particular, our report evaluated the CFPB's preliminary ...

New Paper: Americans Hurt By Forced Arbitration Agreements with Big Banks, Credit Card Companies

by Brian Gumm | May 04, 2016
NEWS RELEASE: New Paper Shows Americans Hurt By Forced Arbitration Agreements with Big Banks, Credit Card Companies Forthcoming Rule from Consumer Financial Protection Bureau Offers Some Solutions, but More Can Be Done to Protect Consumers Opening a checking account or using a credit card is an essential, everyday activity for many Americans, but most financial services are governed by pages of fine print, much of which is difficult to navigate and understand. As a new paper from the Center for ...

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