Washington, D.C. — Today at a field hearing in Albuquerque, New Mexico, Consumer Financial Protection Bureau, or CFPB, Director Richard Cordray announced a proposed rule that would prohibit companies from banning class action lawsuits through mandatory arbitration clauses in the fine print of financial product contracts. The rule would also monitor the use of arbitration clauses that limit individuals’ right to sue.
Carmel Martin, Executive Vice President, Policy at the Center for American Progress, issued the following statement:
For years, fine print buried in thick contracts has prevented consumers from pursuing rightful legal remedies when they have been harmed by tricks and traps in financial products. Director Cordray and the CFPB are to be commended for their work to protect consumers by limiting the use of forced arbitration. It is critical that the agency works to finalize this rule quickly—and for policymakers in Congress to beat back attempts to weaken it.
Joe Valenti, Director, Consumer Finance at CAP, added:
The CFPB has spent years studying the use of arbitration clauses in financial contracts and found that these ripoff clauses are widespread, largely unavoidable for consumers, and harm consumers and financial markets by virtually eliminating a critical safeguard to ensure product quality. The CFPB’s action to limit coercive arbitration clauses will help ensure that American families will have access to safe and responsible financial products, and other regulators should continue their efforts to do the same.
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