By Bret Thompson, Public Citizen
In May, the Consumer Financial Protection Bureau (CFPB) announced they wanted feedback on their plan to curb forced arbitration clauses.
Public Citizen members sent a remarkable 27,890 comments to the CFPB. Once they are added in, our members alone will have tripled the total amount of comments (based on the numbers reported by CFPB’s website around Monday’s closing deadline).
For such a previously under-the-radar issue, this is a huge accomplishment.
Forced arbitration is the latest trick corporations are using to avoid accountability and keep consumer complaints out of public courts. Public Citizen calls them rip-off clauses, because the fine print has crept into contracts everywhere, from Amazon to Chase to Pokémon Go. Consumers are unknowingly signing away their rights to take future complaints to court. Instead, they’re decided by private companies or individuals chosen by the corporation in a kangaroo-court called an arbitration proceeding.
The problem doesn’t end there. Often these rip-off clauses also prevent consumers from joining together in a class action lawsuit. This is critical, because it often doesn’t make sense for consumers to fight companies alone when potential damages are small. Take for example James Pendergast, who was charged $20 by Sprint for “roaming” while he was in his house. A lawyer told him the case would take six figures to take to trial and there was the possibility he would be on the hook for Sprint’s legal bills. Almost no one would take on such a small dollar case by themselves; which is why class action suits are an important tool for consumers to band together to level the playing field.
We applaud the steps being taken by CFPB Director Richard Cordray and his staff (urged on by our members’ call to action) to ban forced arbitration language from financial services consumer contracts.