Righting a Financial Wrong
Debt Settlement Services, Private Student Lenders, and Auto Lenders Use Forced Arbitration to Escape Accountability When They Harm Consumers
February 27, 2014 — The Consumer Financial Protection Bureau in December 2013 released preliminary results of a study called for in the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act on financial services businesses’ use of arbitration clauses in consumer contracts. Such terms, or forced arbitration, call for disputes to be settled before a private arbitrator instead of in a court of law, and usually prohibit consumers from pursuing cases as a class.
The Bureau can make these industry sectors answerable for some of their shady practices by restoring consumers’ ability to enforce their rights on their own. The Bureau has the authority to write a rule to require the regulated consumer financial services industry to eliminate predispute binding mandatory (or forced) arbitration from consumer transactions involving all products under its jurisdiction.