President Donald Trump
1600 Pennsylvania Ave NW,
Washington, DC 20500
Dear President Trump,
The Senate has voted to repeal a crucial pro-consumer protection, with Vice President Michael Pence casting the final vote to break a 50-50 tie.
This year, after careful study and deliberation, The Consumer Financial Protection Bureau (CFPB) restored consumers’ constitutional right to challenge fraud, cheating, deception, and swindles perpetrated by banks and other financial institutions before an impartial judge or jury.
Unscrupulous banks, payday lenders, and credit card companies regularly present consumers with one-sided forced arbitration provisions that block consumer access to courts of law and prevent victims from banding together to challenge financial wrongdoing. Private forced arbitration contract provisions also limit consumer rights to present evidence or appeal a bad or unjust decision. Moreover, defendants in such cases are often repeat-offenders, developing cozy relationships with arbitrators and biasing them against consumers. Shockingly, a 2007 Public Citizen report found that arbitrators working for the National Arbitration Forum (NAF) had ruled against consumers 94 percent of the time. (See: Arbitration: Unfair and Everywhere, September 14, 2009.)
President Trump, there can be no free market without freedom of contract. The Senate’s action to limit consumer rights is a blatant example of crony capitalism. Unbridled corporatism has stripped consumers of their freedom of contract with fine-print, standard-form contracts that become more dictatorial every decade. Consumers are living in a state of contract peonage. Consumer groups throughout the country have documented the problems with forced arbitration and have advocated against these unfair provisions.
In the case of loan contracts that require Service members and family members to waive their right to take legal action, a Department of Defense report goes so far as to say that mandatory arbitration provisions should be outright prohibited:
Service members should maintain full legal recourse against unscrupulous lenders. Loan contracts to Service members should not include mandatory arbitration clauses or onerous notice provisions, and should not require the Service member to waive his or her right of recourse, such as the right to participate in a plaintiff class. Waiver is not a matter of “choice” in take-it-or-leave-it contracts of adhesion…
Mandatory arbitration clause
By eliminating a borrower’s right to sue for abusive lending practices, these clauses work to the benefit of payday lenders over consumers. (See: Report On Predatory Lending Practices Directed at Members of the Armed Forces and Their Dependents, August 9, 2006).
In an August 18, 2016 letter to CFBP Director Richard Cordray and then-Assistant Director Hollister (Holly) K. Petraeus, The Military Coalition (TMC), “a consortium of uniformed services and veterans organizations representing more than 5.5 million current and former Service members and their families and survivors” vehemently expressed their unanimous opposition to forced arbitration:
Forced arbitration is an un-American system wherein service members’ claims against a corporation are funneled into a rigged, secretive system in which all the rules, including the choice of the arbitrator, are picked by the corporation. Found in almost every financial services contract, forced arbitration clauses systematically include a provision banning the rights of consumers to ban together to hold a corporation accountable. Given the exponential and expansive use of these clauses by financial institutions in contracts with service members, prohibiting the practice of forcing service members to surrender fundamental Constitutional and statutory rights through the use of pre-dispute forced arbitration clauses is now more critical than ever.
Our service members protect our nation against both foreign and domestic threats. The sacrifices and logistical undertakings they and their families make in order to serve are compelling reasons alone to ensure they are not only shielded from predatory financial practices and unscrupulous lenders, but are also able to enforce their congressionally mandated rights through our civil justice system if and when violations arise.
You have repeatedly said how much you value the sacrifices members of the armed forces make, recently referring to them, in a tweet, as “our true HEROES.”
Your supporters and countless other Americans will be harmed by the Senate’s cruel and disingenuous vote.
If you truly care about consumers you should VETO this mean-spirited and unjust bill, which is nothing more than a gift to the unprincipled perpetrators of financial abuses. Thousands of gouged service members and veterans will not forget you turning your back on them, year after year, should you sign this cruel bill.