Got a Credit
Card or Bank Account? Scrutiny of Forced Arbitration Is Good News
We expect that any
fair examination of forced arbitration will conclude that the practice is
devastatingly harmful to consumers. The most critical step, then, will be for
the CFPB to ban forced arbitration, ensuring that arbitration is always
voluntary for consumers â not a kangaroo court or a tool for law-breaking
corporations to insulate themselves from accountability.
Got a Credit
Card or Bank Account? Scrutiny of Forced Arbitration Is Good News
Statement of
Christine Hines,
Public Citizenâs
Consumer and Civil Justice Counsel
We welcome todayâs announcement that the
Consumer Financial Protection Bureau (CFPB) will study the impact of forced
arbitration in consumer financial services contracts, as required by the
Dodd-Frank Act. The agencyâs decision to begin working on the issue is good
news for anyone who has a credit card, short-term loan, bank account or other
financial service contract.
The principal goal of forced arbitration
is to prevent consumers from joining together in class actions, because in many
instances it is not feasible for consumers to pursue claims on an individual
basis. Class-action bans allow companies to rip off consumers with virtual
impunity, so long as they take relatively small amounts of money from each
person. Individual arbitrations tend to be biased against consumers and favor
the companies that provide arbitrators with repeat business.
F
orced arbitration clauses usually are
slipped into the small type of the lengthy documents you get when you apply for
a credit card or loan, buy a cell phone or download computer software. We have
long said that forced arbitration unreasonably denies consumers the ability to
pursue claims against corporate misconduct. Our previous reports have shown
that consumers overwhelmingly are on the losing end of contracts and terms of
service that contain arbitration clauses.
We expect that any fair examination of
forced arbitration will conclude that the practice is devastatingly harmful to
consumers. The most critical step, then, will be for the CFPB to ban forced
arbitration, ensuring that arbitration is always voluntary for consumers â not
a kangaroo court or a tool for law-breaking corporations to insulate themselves
from accountability.
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Public Citizen is a
national, nonprofit consumer advocacy organization based in Washington, D.C.
For more information, please visit www.citizen.org.
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