CFPB, Testing Trump and Republicans, Moves to Restrict Forced Arbitration
The Consumer Financial Protection Bureau on Monday finalized a sweeping new rule banning arbitration agreements that prevent class actions against…
July 11, 2017 at 08:27 AM
7 minute read
The original version of this story was published on Law.com
The Consumer Financial Protection Bureau on Monday finalized a sweeping new rule banning arbitration agreements that prevent class actions against banks and other financial institutions, setting the stage for parallel legal and political fights over a regulation that Republican lawmakers will seek to overturn before it sees the light of day.
“Arbitration clauses in contracts for products like bank accounts and credit cards make it nearly impossible for people to take companies to court when things go wrong,” said CFPB Director Richard Cordray, in a prepared statement. “These clauses allow companies to avoid accountability by blocking group lawsuits and forcing people to go it alone or give up. Our new rule will stop companies from sidestepping the courts and ensure that people who are harmed together can take action together.”
The move comes more than a year after the CFPB proposed the rule for arbitration agreements, calling such terms “contract gotchas” that allow the financial industry to sidestep the legal system. In taking the final step to push forward with the rule, the CFPB crossed off a bucket-list item for Cordray as he enters the final year of his five-year term and mulls a run for governor in his home state of Ohio.
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