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 close scrutiny from policymakers and the public because their abuse poses a significant threat to the financial well-being of millions of Americans. What they say is that if you have a dispute with your financial services company and can't persuade the company to address the harm it has caused, you are prohibited from suing the corporation in court. Instead, your only option is to try pursuing your claim in an inferior forum known as 'arbitration'.

Consumers face high barriers to even initiate an arbitration claim, and, once started, they will find that every step of the process is heavily stacked against them and in favor of the financial services company. The basic principles of fairness and due process protections we have come to expect in traditional courts of law are often conspicuously absent in arbitration.

Following the 2008 economic meltdown, the US Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act to crack down on the ...

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 ...

Sorry, Senator Vitter. The CFPB Is in Full Compliance with Small Business Outreach Law.

by James Goodwin | August 15, 2016
While the Rolling Stones' "You Can't Always Get You Want" may be an ill-advised campaign song, perhaps it can still serve as the official theme song for Sen. David Vitter's (R-LA) Government Accountability Office (GAO) report requests. The anti-regulatory senator had requested that the GAO audit the Consumer Financial Protection Bureau (CFPB) – a favorite punching bag of the right – to determine whether it is complying with the small business outreach requirements imposed by the Small Business Regulatory Enforcement ...

Corporations Advance Food Policy Agenda, but on Whose Terms?

by Mollie Rosenzweig | August 05, 2016
Americans are increasingly looking for reforms in our food system. Limited use of pesticides, animal welfare, and sustainability are just some of the issues becoming more important to consumers when they make decisions about their food. Unfortunately, Congress and the regulatory agencies charged with overseeing the food supply have worked slowly – very slowly – to address these and other pressing issues as of late. On the other hand, the food industry and retailers have seen the writing on the ...

Airlines' Bait-and-Switch Scheduling

by David Driesen | June 02, 2016
During the last few years, airlines have increased their reliance on "bait-and-switch" scheduling. They induce travelers to choose their airline based on advertised routes and schedules. They know that especially good routes are valuable and generally charge more for a good route than a bad one. Long after travelers have taken the bait, often paying more than the lowest available price to avoid delay-prone airports, long layovers, and multiple stops, the airlines simply switch around the schedule. While many of ...

GAO Confirms Dangerous Working Conditions across Poultry Industry

by Katie Tracy | May 25, 2016
This morning, the U.S. Government Accountability Office (GAO) released a report finding that hazardous working conditions across the meat and poultry industry put workers at risk of on-the-job injuries and illnesses. While injury and illness rates reportedly declined in the decade from 2004 to 2013, GAO emphasizes that the decrease might not be because of improved working conditions in the industry. Rather, the drop is likely due to data-gathering challenges at the Department of Labor and underreporting across the industry.  ...

Feds Open Criminal Investigation of Dole Listeria Outbreak

by Mollie Rosenzweig | May 12, 2016
The U.S. Department of Justice (DOJ) recently launched a criminal investigation of Dole Food Company, continuing a trend of criminal enforcement against those responsible for deadly food safety lapses. The investigation stems from a Listeria outbreak in bagged salad that sickened 33 people, four of whom died.  Between September 2015 and January 2016, 33 people in the U.S. and Canada became infected with Listeria from bagged lettuce processed at Dole's Springfield, Ohio plant. At first, investigators struggled to trace the ...

New Oxfam Report: Poultry Industry Denies Worker Requests for Bathroom Breaks

by Katie Tracy | May 11, 2016
Can you imagine working for a boss who refuses you the dignity of taking a bathroom break? According to a revealing new report published today by Oxfam America, denial of bathroom breaks is a very real practice at poultry plants across the country, and line workers at these plants often "wait inordinately long times (an hour or more), then race to accomplish the task within a certain timeframe (e.g., ten minutes) or risk discipline."  If you've never worked on an ...

Genetically Modified Mushroom Moves Forward with No Oversight

by Mollie Rosenzweig | April 22, 2016
Just as we predicted back in December, foods created with CRISPR technology (short for clustered regularly-interspaced short palindromic repeats) are entering the food supply beyond the reach of federal regulators. Last week, the U.S. Department of Agriculture (USDA) announced that it would not regulate white button mushrooms that scientists altered to stop them from browning. The agency's confirmation that it is unable to regulate CRISPR-modified foods confirms that the current statutory scheme for genetically modified foods is not sufficient.  In ...

Beware of BPA: New Report Finds Toxic Substance Widespread in Canned Foods

by Mollie Rosenzweig | April 06, 2016
Consumers, take note: Last week, Clean Production Action published a troubling new report, Buyer Beware: Toxic BPA and regrettable substitutes found in the linings of canned food, on the presence of toxic bisphenol-A (BPA) in canned foods. The report, co-written by Breast Cancer Fund, Campaign for Healthier Solutions, Ecology Center, and Mind the Store Campaign, found BPA in the lining of the majority of canned foods sold by major retailers across the United States and Canada. As the Center for ...

USDA Official Throws OSHA Under the Bus

by Matt Shudtz | March 22, 2016
Partisan efforts in Congress to roll back health and safety rules are common fodder on this blog. But last week, we saw a new twist, with a high-level Obama Administration official giving cover to a right-wing attempt to weaken protections for hundreds of thousands of workers in the poultry industry. The workers in question are at the center of the highly industrialized process of turning live chickens into shrink-wrapped skinless parts. That puts them at a critical juncture in the ...

What Are 'Ag-Gag' Law Proponents Trying to Hide?

by Mollie Rosenzweig | February 19, 2016
At a time when consumers are demanding greater transparency in the food system – and some food companies are delivering by means of genetically modified organism labeling and removal of artificial food dyes — a troubling North Carolina law that runs counter to that goal has recently gone into effect. The state’s so-called “ag-gag” law prohibits whistleblowers from making audio or video recordings inside industrial agricultural facilities. Following the success of a similar suit in Idaho last year, consumer protection ...

VapeMentors, the Fat Cat Vapor Shop, and Cosmic Fog Vapors All Walk Into an Obscure White House Office...

by James Goodwin | December 16, 2015
This week appears to mark the end of an extraordinary period in the history of the White House Office of Information and Regulatory Affairs (OIRA), the shadowy bureau charged with reviewing and revising pending agency rules, which too often ensures they are not overly inconvenient for affected industries.  For the last month and a half, a Mos Eisley-esque mélange of characters has streamed through the front doors to lobby OIRA’s gang of economists and political operatives over a pending rule that would ...

FDA and the Future of 'Frankenfish'

by Mollie Rosenzweig | December 07, 2015
If you've come across one of the ads, newspaper stories, or opinion pieces from Chuck Norris in the past week warning you about frankenfish, you can thank the FDA. In mid-November, the FDA made history by approving the first genetically engineered (GE) animal for human consumption, Atlantic salmon from the company AquaBounty. Not only has the approval process failed to win over skeptics, exposing the weaknesses in the current legal regime that governs plants and animals developed through biotechnology, it raises important questions ...

John Boehner, Volkswagen, and the Role of Government

by Sidney Shapiro | October 06, 2015
The resignation of House Speaker John Boehner and the VW diesel car scandal -- two rather extraordinary events -- might not initially appear to be related, but there is a connection. The most conservative members of the Republican caucus celebrated Representative Boehner's resignation because they felt he did not fight hard enough to shrink the size of the federal government through more aggressive tactics, like government shutdowns. Although one of government's most important functions is to deter behavior such as ...

VW Scandal: Can Anyone Still Doubt the Need for Regulation?

by Robert Verchick | September 22, 2015
Center for Progressive Reform President Robert R.M. Verchick issued the following statement today in response to the burgeoning Volkswagen emissions scandal: With the Volkswagen emissions scandal, hard on the heels of the GM settlement, can anyone doubt the importance of strong regulation and tough enforcement? One automotive giant let a safety problem fester for a decade while more than 120 people died as a result. Another conspired to cheat on state emissions tests, pumping outrageous loads of pollution into the ...

CPR's Steinzor Reacts to Parnell Sentencing

by Erin Kesler | September 21, 2015
Today, Stewart Parnell, former peanut company executive was sentenced to 28 years in prison for his role in a salmonella outbreak that resulted in the deaths of nine people and the illness of 174. CPR Member Scholar and University of Maryland School of Law professor Rena Steinzor issued the following statement in response to the sentencing: This sentence shows that the courts are willing to drop the boom on white collar criminal defendants whose elevation of profits over safety go ...

Steinzor Reacts to GM Settlement Deal

by Rena Steinzor | September 17, 2015
CPR Member Scholar Rena Steinzor reacted to today's announcement of a settlement between General Motors and the Justice Department over charges stemming from the company's failure to disclose a deadly ignition defect it millions of its cars. Steinzor said: This settlement is shamefully weak. GM and its executives knew for years that they had a big problem with the ignition switch, which caused cars to stall at high speeds, depriving drivers of power steering, brakes, and airbags.  The company’s dysfunctional ...

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