U.S. PIRG Statement on the CFPB’s New Arbitration Rule
“CFPB Rule Will Prevent Wells Fargo and Other Wrongdoers from Blocking Groups of Consumers from Taking Them to Court”
WASHINGTON - This Statement Can Be Attributed to U.S. PIRG Consumer Program Director Ed Mierzwinski
“U.S. PIRG commends the Consumer Financial Protection Bureau for finalizing an important rule to prevent financial firms from using mandatory arbitration clauses to deny consumers the right to have their day in court. These small-print clauses in boilerplate, take-it-or-leave-it contracts have for too long prevented consumers who individually could not afford a lawyer from banding together in class actions when, collectively, the wrongdoing costs them millions of dollars or more.
This CFPB rule will prevent Wells Fargo and other wrongdoers from blocking groups of consumers from taking them to court. Incredibly, Wells Fargo has argued that mandatory arbitration clauses on its actual accounts prevent its customers from bringing class actions against its millions of fake accounts.
By restoring class action rights to financial customers, the CFPB rule will also force better behavior in the financial marketplace, since companies will want to clean up their practices to avoid being held accountable for breaking the law. Three items of note: first, Congress gave CFPB the authority to do this; second, in 2007 Congress banned arbitration in certain loans to servicemembers and veterans; and, third, in 2010 Congress banned arbitration in most mortgages.
The idea of the CFPB needs no defense, only more defenders."
U.S. PIRG, the federation of state Public Interest Research Groups (PIRGs), stands up to powerful special interests on behalf of the American public, working to win concrete results for our health and our well-being. With a strong network of researchers, advocates, organizers and students in state capitols across the country, we take on the special interests on issues, such as product safety,political corruption, prescription drugs and voting rights,where these interests stand in the way of reform and progress.