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Consumers may have a harder time suing financial companies they feel have wronged them.
The Senate voted Tuesday night to overturn a rule the Consumer Financial Protection Bureau worked on for more than five years. The final version of the rule banned companies from putting “mandatory arbitration clauses” in their contracts, language that prohibits consumers from bringing class-action lawsuits against them. It applies to institutions that sell financial products, including bank accounts and credit cards.
[...] “By forcing consumers into secret arbitration, corporations have long enjoyed an advantage in the process, and victims have often been precluded from sharing their stories with the press or law enforcement,” said Vanita Gupta, the president and CEO of the Leadership Conference on Civil and Human Rights, a group of advocacy organizations based in Washington, D.C.
[...] Mandatory arbitration clauses typically say that companies or customers must resolve disputes through privately appointed individuals known as arbitrators, but not through the court system, allowing companies to save time and money and avoid negative publicity. When consumers sign forced arbitration clauses, which they may not realize are included in contracts, they waive their right to participate in a class-action lawsuit against companies.
[...] The Senate's vote against the CFPB’s rule “is a win for consumers,” said Rob Nichols, the president and CEO of the trade group American Bankers Association. “As we and others made clear in our multiple comments to the CFPB, the rule was always going to harm consumers and not help them.”
Source: MarketWatch
(Score: 4, Interesting) by TheRaven on Tuesday October 31 2017, @03:54PM (15 children)
sudo mod me up
(Score: 2, Disagree) by The Mighty Buzzard on Tuesday October 31 2017, @04:00PM (14 children)
Good idea. Class-action lawsuits are only ever good for the lawyers anyway. They get half the total payout and you get enough to maybe cover your lunch.
My rights don't end where your fear begins.
(Score: 5, Insightful) by Thexalon on Tuesday October 31 2017, @04:52PM (13 children)
Class action lawsuits serve exactly the purpose GP explained: When one bad actor does something that harms a large number of people.
For instance, imagine if your local ISP simply overcharged everybody $15 for no reason whatsoever. They didn't try to justify the charge, they didn't even invent a new fee for a service you could opt out of, they just demanded $15 (or dinged your credit card if you have automatic payments) than they said they would charge you in your consumer contract, and refused to refund the money. Without a class-action lawsuit option, your options would be:
A. Write angry letters / emails. These will go in the circular file.
B. Cancel your service. Good luck with that: The ISP is a monopoly, so you're now without Internet access.
C. Sue them individually. So now you're talking about spending something like $600 in legal fees to recover $15 worth of stolen property. No rational person will do this.
What that means is that without a class action option, the ISP has absolutely no incentive to not do this. Sure, their PR department might have a bunch of work to do for the week or so after they do it, if anybody notices, but for an extra $450 million or so I think they'd be perfectly happy to deal with that annoyance.
That's where the class action comes in: The lawyers recruit a bunch of people who've been affected to be the "lead plaintiffs", sue, and recover the $450 million plus another $50 million in damages and attorney's fees. Now you just see the $15 back and are thinking "whatevs, no big deal", but the company just got a $50 million loss, and that they're going to notice. And sure, the lawyers are going to take home a bunch if they win. But that credible threat is the only thing in our legal system standing between you and even more petty abuse by every single major company you deal with.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 0, Troll) by The Mighty Buzzard on Tuesday October 31 2017, @05:09PM (9 children)
You're either a lawyer or care more about punishing the offender than making it right to people who were harmed. Class-action suits do almost nothing to redress harm already done. Realistically it does very little to address any future bad behavior either because judges are loathe to slap a penalty on a company that will actually harm it significantly.
My rights don't end where your fear begins.
(Score: 3, Interesting) by bob_super on Tuesday October 31 2017, @05:18PM
> Class-action suits do almost nothing to redress harm already done.
My favorite kind of settlement is when you get a coupon to get a discount off buying more stuff from the company which wronged you.
the lawyers don't get coupons, they get cash.
(Score: 5, Insightful) by Thexalon on Tuesday October 31 2017, @05:25PM
In my example, the class action suit exactly redresses the harm done: The ISP overcharged people $15, everyone got their $15 back. We'll even assume the judge gave the ISP a slap on the wrist.
Now consider what you're advocating for: None of the people robbed pursue the case, because individually it's not worth it to do so. And since it's a civil matter, the government does nothing. So that means the company that just robbed 30 million people for $15 apiece gets to keep their ill-gotten gains without any punishment, and the people who were harmed are out the $15 with no legal recourse. In other words, if you rob the bank, you go to jail. If the bank robs you, they get to keep the money. Now, please explain to me how that's an improvement.
Class action suits aren't perfect by any means, but they're better than not having them.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 3, Insightful) by DeathMonkey on Tuesday October 31 2017, @05:26PM
...care more about punishing the offender than making it right to people who were harmed.
Which is a description of our criminal justice system. Why would the civil justice system be much different?
(Score: 5, Insightful) by NewNic on Tuesday October 31 2017, @07:06PM (1 child)
Your argument is that because you ordinary benefit significantly from class action lawsuits, companies should be allowed to bar such lawsuits and force arbitration? Do you see the flaw?
Forced arbitration means that people won't even be able to get the tiny awards that class actions typically dole out.
Class action lawsuits typically don't provide real compensation to people harmed by the actions of a large company, but they do provide an incentive to not repeat those actions. Yes, primarily the purpose of class actions is punitive, not restorative. Why is that a problem? Do you think that companies should be immune from punishment for bad actions?
If the total award (including that to the lawyers) is high enough, it become less cost effective to defraud or otherwise harm your customers. That's the real benefit of class actions.
You are allowing your hatred for lawyers to overcome rational thinking (or perhaps not, because you don't generally show much rational thinking anyway).
lib·er·tar·i·an·ism ˌlibərˈterēənizəm/ noun: Magical thinking that useful idiots mistake for serious political theory
(Score: 2) by The Mighty Buzzard on Tuesday October 31 2017, @08:28PM
No, that was in fact not my argument. That is your strawman. Reread what I actually said without adding words of your own.
My rights don't end where your fear begins.
(Score: 0) by Anonymous Coward on Tuesday October 31 2017, @09:36PM (2 children)
Surely they issue here is to fix class actions so they're more effective rather than allow companies to make signing away your right to them (in favour of fuck all) a part of any contract with them.
Presumably these things have some effect, otherwise we'd not see the banking lobby waste time crowing about their victory.
(Score: 2) by The Mighty Buzzard on Tuesday October 31 2017, @09:43PM (1 child)
Sounds good to me. I was speaking from an individual perspective above. It currently makes no sense for anyone to ever join a class-action suit if they can afford the necessary legal representation to win an individual suit.
My rights don't end where your fear begins.
(Score: 2, Informative) by j-beda on Wednesday November 01 2017, @01:02AM
Even if you can affort the necessary legal representation to win an individual suit, it can often be not worth it to open one. I can afford to sue for the hypothetical $15 overcharge, but I am unlikely to do so since recovering $15 is unlikely to be worth my time and effort, even if I recover legal fees in addition to the $15. It is worthwhile in my opinion to join a class action lawsuit of this nature, even if I only recover a small fraction of my losses. Additionally, I would see joining such a class action as being benificial to society at large, even if I recover nothing.
(Score: 0) by Anonymous Coward on Tuesday October 31 2017, @11:39PM
The point of class action suits is to punish the offending party because it's cost prohibitive for people to take companies to court, even small claims court, for small amounts of money. Even at the federal minimum wage, it's not worth missing a day of work for $5 or even $50. Companies know it and if they make a "mistake" of that magnitude they can rake in millions of dollars with little risk of being taken to court.
A class action suit bundles those small claims together into a bundle large enough that it's more cost effective to file suit. They get to keep the lion's share of the money because that's what it costs to file the suit and provide the service. The idea that these suits would have been filed otherwise is ridiculous. Even worse, when the company is out of state and you're stuck paying to use out of state courts where you're paying airfare and housing.
Class action suits exist as a deterrent to bad behavior that isn't criminal in nature. It's for those cases that aren't interesting enough for the attorney general's office to file suit over.
(Score: 0) by Anonymous Coward on Tuesday October 31 2017, @05:14PM (1 child)
$600 in legal fees? Where do you find your lawyers, India? China? Ootbakinowherestan?
(Score: 2) by Thexalon on Tuesday October 31 2017, @05:26PM
Where I live, that pays for about 3 hours of a lawyers' time to help prepare the (relatively simple) case, which should be more than sufficient.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 2) by tomtomtom on Wednesday November 01 2017, @10:31AM
Fortunately, there's a much better way to deal with that specific situation: dispute the charge via your bank or credit card company. Quick, painless and you get all your money back. If you were a participant in a class action, you'd get 50 cents back after 5 years. It really, really, isn't a good system.