The below letter was drafted by Americans for Financial Reform, Public Citizen, and the National Association of Consumer Advocates. For more information, please contact Amanda Werner at (202) 973-8004, firstname.lastname@example.org or Christine Hines at (202) 452-1989, email@example.com.
-- ____, 2017 Monica JacksonOffice of the Executive SecretaryConsumer Financial Protection Bureau1700 G Street, NWWashington DC 20552 Re: Final Rule on Arbitration Agreements
The 310 undersigned consumer, civil rights, labor, community, and non-profit organizations write to state our strong support for the Consumer Financial Protection Bureau (CFPB)’s final rule to limit pre-dispute binding mandatory (or forced) arbitration clauses in consumer finance contracts. The rule, which will restore consumers’ ability to band together in court to pursue claims, is a significant step forward in the ongoing fight to curb predatory practices in consumer financial products and services and to make these markets fairer and safer.
Lenders and other financial services companies use forced arbitration to push consumers out of court and into a private arbitration system that is tilted against them. Forced arbitration eliminates the right to a civil jury trial, limits discovery, restricts or prohibits public disclosure of proceedings and outcomes, and makes meaningful appeals virtually impossible. It also often prohibits consumers from banding together in a class action to hold the company responsible.
Recent scandals again demonstrate the very real harm forced arbitration causes consumers. Reports show that customers had been trying to sue financial services institutions over fraudulent accounts going back a number of years. However, some banks forced those customers into secret, binding arbitration by invoking fine print in consumers’ legitimate account agreements to block them from suing over reasons as outrageous as fake accounts, also helping to keep the scandal out of the public eye. Even in cases where widespread fraud has been exposed, banks continue to invoke these fine-print clauses to kill lawsuits stemming from their illegal acts and block consumer recovery.
The CFPB’s thorough arbitration study further documents how forced arbitration blocks consumer access to courts, shielding banks and lenders from meaningful accountability for their unlawful behavior. Finalizing the proposed rule will restore crucial class action rights that deter systemic abuses and bring much-needed transparency to consumer financial arbitration...
See the full letter at bit.ly/2muPunn.