Later this morning the CFPB will begin taking comments on proposed rules that would ban financial firms from placing mandatory arbitration clauses within consumer contracts.
Said clauses ban consumers from seeking redress for potential issues in a court of law, in favor of disputes between consumers and various firms (credit card companies, banks and other FI) through legally binding arbitration. Arbitration also prevented groups of allegedly wrong consumers from forming class action suits.
“Signing up for a credit card or opening a bank account can often mean signing away your right to take the company to court if things go wrong,” said CFPB Director Richard Cordray. “Many banks and financial companies avoid accountability by putting arbitration clauses in their contracts that block groups of their customers from suing them. Our proposal seeks comment on whether to ban this contract gotcha that effectively denies groups of consumers the right to seek justice and relief for wrongdoing.”
The CFPB’s proposal is designed to protect consumers’ rights to pursue justice and relief, and deter companies from violating the law.