If you have a checking account, this affects you:
This week, Senate Republicans voted to overturn the Consumer Financial Protection Bureau’s new rule that protects your right to take big banks and financial institutions like Wells Fargo and Equifax to court when they cheat you.
We worked our hearts out seven years ago to create an agency that would get the tricks and traps out of financial products and level the playing field for working families. But now, Senate Republicans are gutting the CFPB and weakening essential consumer protections.
If you have a checking account, a credit card, or a student loan, you’ve probably signed a very long contract with a bunch of gibberish that you didn’t bother to read.
(It’s ok, I was a contract law professor for many years, and I’ve done it, too.)
Hidden in the fine print of many of those contracts is a forced arbitration clause. That’s a fancy way of saying that you signed away your right to join together in court in a class action lawsuit to challenge big companies when they break the law.
I call these forced arbitration clauses “ripoff clauses,” and for good reason. If a bank unfairly charges you $10, you’re most likely not going to spend the time and money challenging them all on your own through an industry-friendly arbitration process. So if a bank sneaks that small fee in millions of people’s bills, they can create ginormous profits for themselves — with little accountability from their customers.
By prohibiting forced arbitration clauses, the CFPB made huge progress in stopping companies from tricking, misleading, and flat out cheating their customers. But then the big financial institutions spent millions of dollars on lawyers, lobbyists, and slick PR campaigns to get their Republican pals in Congress to reverse this policy.
That’s millions of dollars on top of the big bucks that they’re already spending to repeal the rules we put in place after the 2008 crisis — including the new Consumer Financial Protection Bureau.
The CFPB is doing its job — and our job is to defend the agency and to defend its work.
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