Treasury report slams consumer bureau in latest salvo over arbitration rule

Treasury report slams consumer bureau in latest salvo over arbitration rule

Yet consumer advocates argue it is precisely that Wall Street clout that makes the watchdog Consumer Financial Protection Bureau (CFPB), which originated the rule against forced arbitration, a helpful counterweight for average Americans. However, it is inexcusable when plaintiffs' lawyers and consumer advocates blatantly distort the impact that the override of the arbitration rule will have on members of the military. The petition bolsters recent survey findings from both progressive and conservative pollsters - as well as polls in Alaska, Arizona, Louisiana, Maine and OH - showing strong bipartisan support for protections from forced arbitration.

Senate Republicans voted Tuesday to strike down a sweeping new rule that would have allowed millions of Americans to band together in class-action lawsuits against financial institutions.

The Senate vote was "a giant setback for every consumer in this country", said the CFPB's Director Richard Cordray.

By contrast, companies won money in more than 9 out of 10 arbitrated cases in which they filed claims or counterclaims - and they received a total $2.8 million from consumers. The Hill reports that Republican Senators Lindsey Graham (S.C.) and John Kennedy (La.) voted with Democrats to keep the rule in place, but it was not enough.

While the report criticizes the CFPB's new rules, it does not call for them to be repealed. "The Office of the Comptroller of the Currency recently reported that the Bureau's own data show that the Rule's costs will very likely be passed through to consumers in the form of higher borrowing costs for credit card users, among other burdens". Prior to the rule, the CFPB said companies could "sidestep the court system" by "forcing consumers to give up or go it alone".

The final rule prohibits covered providers of certain consumer financial products and services from using an agreement with a consumer that provides for arbitration of any future dispute between the parties to bar the consumer from filing or participating in a class action concerning the covered consumer financial product or service.
It also said the rule often runs counter to the findings of an arbitration study the bureau compiled in 2015.

The example of Wells Fargo, the large national bank caught defrauding customers by signing up them for fee-based accounts and auto insurance they never wanted, brought the issue into the limelight. The Senate could vote on S.J. Res. 47 as soon as tonight. "Chances are pretty good that if the bank charged you an unauthorized $30 fee that there are other customers in the same boat and that means if you want you can join a class action lawsuit against the bank for free", said Warren.

The GOP opposition to the rule was supported by the Treasury Department, which released a report on Monday saying that the CFPB's arbitration rule would "impose extraordinary cost", imposing $500 million in additional legal fees that would largely go to plaintiffs' lawyers. Consumers noticed that when they signed up for Equifax's monitoring services after the breach, the company originally had a forced arbitration clause in its contract.

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