October 3, 2017
NYLAG opposes attempts by the Senate to remove consumers’ rights to sue banks, payday lenders, and other financial institutions. The Senate is currently considering rolling back consumer protections issued by the Consumer Financial Protection Bureau (CFPB), a federal agency, that would prohibit forced arbitration clauses in consumer contracts. The U.S. House of Representatives has already voted to repeal this rule, and the Senate’s resolution, if passed, would block the rule entirely.
The CFPB rule allows consumers who have been defrauded by financial institutions to bring or join class action suits in court. Many financial institutions currently include arbitration clauses in contracts requiring consumers to take claims against the company to a private individual, an arbitrator, who is not part of the court system. The rulemaking process prohibiting these arbitration clauses included an in-depth research report conducted over multiple years and presented to Congress, as well as public comments before the rule was finalized. The CFPB rule protects the clients NYLAG serves, who do not have the resources or time to engage in individual arbitration proceedings but could benefit substantially from a class action law suit. This rule gives all Americans the right to their day in court, and the Senate should not revoke those safeguards.