For Immediate Release
For more information: John Furman (315) 725-0974
Statement of Central New York Citizens in Action, Inc. on Rep. Tenney’s vote to roll back rule on forced arbitration:
Note: Today, the House of Representatives passed H.J. Res. 111, a resolution to repeal the new Consumer Financial Protection Bureau (CFPB) rule to restore consumers’ ability to join together and hold banks and lenders accountable in class action lawsuits when they break the law.
“We are appalled that Rep. Tenney has voted to repeal the Consumer Financial Protection Bureau’s rule restoring crucial consumer rights,” said John Furman, President of the Central New York Citizens in Action, Inc. “Rep. Tenney has put herself squarely on the side of Wells Fargo and payday lenders who rip off their customers and then rely on forced arbitration as a get-out-of-jail-free card. Central New Yorkers will be hurt by forced arbitration which denies access by ordinary consumers to justice. Buried in the fine-print of most financial service contracts lies a “ripoff” clause known as forced arbitration. Signing the contract means forfeiture of your right to your day in court should a dispute with your bank or lender arise. Instead, you are forced into a secretive system where the arbitrator need not follow the facts or the law and there is no appeal.”
On July 10, the Consumer Financial Protection Bureau (CFPB) issued a rule to restrict banks and lenders’ use of forced arbitration — fine-print clauses in contracts for credit cards, bank accounts, and other financial products that prevent people from banding together to challenge fraud by big banks.
The vast majority of Americans don’t even realize they’ve lost their right to sue when they sign a contract with a bank or lender. But these “ripoff clauses” require consumers to submit all disputes to an arbitrator paid by the company against whom they have a complaint in a secret proceeding.
The new rule comes after a three-year study by the CFPB concluded that only 9 percent of consumers who do seek arbitration win any relief, recovering an average of just 12 cents on the dollar. By contrast, companies win 93 percent of their cases and win 98 cents on the dollar.
Wells Fargo, the giant bank that opened millions of fake accounts in its customers’ names without their permission, has relied heavily on forced arbitration to prevent the public from knowing details of its wrongdoing. The vast majority of payday and private student lenders also use forced arbitration, leaving consumers with no viable alternative.
The Congressional Review Act allows Congress to repeal a regulation if both chambers pass a resolution of disapproval and the President signs it. While the House voted to repeal the rule today, the resolution faces an uncertain fate in the Senate.
About Central New York Citizens in Action, Inc.
The Central New York Citizens in Action, Inc. is a public interest research and advocacy organization based in Utica, New York.–
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Central New York Citizens in Action, Inc. was developed from the Utica Citizens in Action, a multi-issue public interest association affiliated with Citizen Action of New York. It was founded in 1997 to address critical social, economic and environmental issues facing residents of Oneida, Herkimer, and Madison Counties. Members of our group worked to empower low and moderate income Central New York residents to participate in shaping the policies that affect their lives, such as economic justice, environment, housing, education, economic development, health care, public benefit programs, and consumer issues. Our projects include research and policy development, public education on a wide range of public policy issues, development of educational materials, community outreach and grassroots organizing, coalition development, training, and lobbying. Please join our email list by sending an email to email@example.com with the subject heading – Join List. We also invite you to become a member of our group and attend our meetings.