Damn, they actually did it.

In one of the more surreal actions to come out of Trump-era Washington, the Consumer Financial Protection Bureau on Monday finalized a rule that bars banks, credit card issuers and the like from using arbitration clauses—the ones buried in the fine print of hundreds of millions of contracts—to block class actions.

It was bold move, and one that couldn't be more out of step with the current administration (which is stuck with Obama appointee Richard Cordray as the agency director, at least for now).

The U.S. Chamber of Commerce promptly labelled the CFPB “an agency gone rogue.” They're right—the CFPB is rogue, but in a good way.

Because the CFPB got this one right: forcing consumers to waive their right to unite in pursuing class actions is a raw deal.

As Cordray said on a conference call with reporters, “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.”

It's important to point out that the CFPB, which is sure to face congressional and Administrative Procedure Act challenges to the rule, went after arbitration based on a specific legislative mandate. The Dodd-Frank Act explicitly required the agency to study the use of pre-dispute arbitration clauses in consumer financial contracts.

Congress further said the CFPB “by regulation, may prohibit or impose conditions or limitations on the use of” such arbitration clauses if the bureau finds that doing so “is in the public interest and for the protection of consumers,” and is “consistent with the study.”

In other words, there's nothing arbitrary or capricious about this.

And the study—728 pages long—was a devastatingly thorough takedown of arbitration, especially in the class action context.

Consider some of the findings:

Over a two-year period, American Arbitration Association neutrals issued 341 decisions in disputes that involved credit cards, checking accounts, prepaid cards, payday loans, private student loans and mobile wireless contracts.

Consumers won awards in 32 cases and obtained debt forbearance in 46 cases. The total combined relief in all cases: under $400,000.

Compare that to the results obtained via class actions. According to the CFPB, financial services companies paid an average of $540 million a year to settle class actions over a five-year period. Between 2008 and 2012, courts approved 422 settlements, yielding more than $2.7 billion in cash, in-kind relief, expenses and fees—with about 18 percent going to lawyers.

Moreover, when the study compared financial services providers that required arbitration to those that did not, it found no evidence that arbitration clauses led to lower prices or increased access to credit for consumers.

National Association of Consumer Advocates legislative director Christine Hines was spot-on when she called forced arbitration “a get-out-of-jail-free card for financial institutions that wrongly take a little bit of money from a lot of people.”

It's not that arbitration is all bad for consumers. Mayer Brown partner Andrew Pincus last year testified before a House Financial Services subcommittee that someone with a relatively small, individual grievance—say a $10,000 dispute with a bank—fares better in arbitration.

Companies foot most or all of the bill for the proceedings, and arbitrators are famous for their proclivity to split the baby. There's a decent chance that a consumer who actually bothered to pursue his or her own case wouldn't walk away empty-handed.

Companies are still free to require their customers to arbitrate individual disputes—the CFPB rule applies to class actions only—but it's not likely they'll do so.

“No rational business will pay the costs associated with two systems,” Pincus said in his written testimony. “Forcing them to spend the millions in legal fees it costs to defend against class actions, and they will drop arbitration rather than voluntarily take on duplicative dispute resolution expenditures.”

Or as Public Justice Executive Director F. Paul Bland Jr. said at the same hearing, the banks will “take their arbitration ball and go home.”

Fine.

As a trade-off, it's worth it. Many of the individual disputes could be brought in small claims court. But when it comes to widespread, small-scale rip-offs, there's no substitute for class actions.

Yes, plaintiffs lawyers will make money, maybe a lot of money. Yes, the system is not perfect. But how else do you hold companies accountable?

To quote Judge Richard Posner of the U.S. Court of Appeals for the Seventh Circuit, “The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.”

Contact Jenna Greene at [email protected]. On Twitter @jgreenejenna.