Published: August 2016

Consumers have a right to their day in court

Forced arbitration clauses are agreements that large corporations often hide in the fine print of contracts that Americans sign every day. These clauses have big consequences: By restricting access to the court system, these clauses prevent consumers who have been wronged from seeking meaningful legal recourse. The Consumer Financial Protection Bureau has proposed a new rule that will prohibit financial services companies and big businesses from including provisions in their fine-print agreements that prevent class-action lawsuits. It's a good start toward unraveling the growing stranglehold that forced arbitration has on consumer rights.

Under the Dodd-Frank Act, the Consumer Financial Protection Bureau (CFPB) was required to conduct a study on arbitration in the financial services sector. That study found that not only is forced arbitration widespread, but it's also extraordinarily unfair to consumers. Nowhere is forced arbitration more prevalent than in the contracts for consumer financial products, such as credit cards, bank accounts and mobile wireless agreements. These are services many consumers can't live without, yet consumers are often unaware they are agreeing to waive a host of fundamental rights when quickly skipping over the fine print and clicking “I agree.”

Consumer Action joined consumer advocates in supporting the CFPB’s proposed rule. The class-action ban needs to end and restoring the fundamental right to fair legal proceedings sends a vital message about the importance of consumers' rights to big businesses.

 

Lead Organization

American's for Financial Reform (AFR) & Public Citizen

Other Organizations

9to5, National Association of Working Women Action In Maturity, Inc. | Affordable Housing Alliance | AFL-CIO | Alliance for Justice American Family Voices | Public Justice Center | American Federation of State, County and Municipal Employees (AFSCME) | Americans for Democratic Action | Americans for Financial Reform | Association of University Centers on Disabilities | Bankruptcy Law Center | Build Our Homes Right | Center for Economic Integrity | Center for Economic Justice | Center for Global Policy Solutions Center for Justice & Democracy | Center for Popular Democracy | Center for Responsible Lending Committee to Support the Antitrust Laws | Consumer Action | Consumer Federation of America | Consumers for Auto Reliability and Safety | Consumer World | Economic Analysis and Research Network (EARN) | Economic Policy Institute | The Employee Rights Advocacy Institute For Law & Policy Homeowners Against Deficient Dwellings | Institute for Science and Human Values | International Association for College Admission Counseling Jobs With Justice | Justice in Aging | League of United Latin American Citizens | Main Street Alliance | NAACP | Public Citizen | Public Law Center | Reinvestment Partners | Service Employees International Union (SEIU) | Southern Poverty Law Center | The Institute for College Access & Success | United Policyholders | Woodstock Institute | Workplace Fairness | World Hunger Education, Advocacy & Training (WHEAT) | Young Invincibles

More Information

For more information, please visit AFR's website.

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Consumers have a right to their day in court   (CFPB_Arb_Rule.pdf)