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posted by n1 on Tuesday October 31 2017, @03:35PM   Printer-friendly
from the customer-is-always-wrong dept.

Submitted via IRC for SoyCow1

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


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  • (Score: 2, Informative) by j-beda on Wednesday November 01 2017, @01:02AM

    by j-beda (6342) on Wednesday November 01 2017, @01:02AM (#590306) Homepage

    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.

    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.

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