July 20, 2017

Main Street Americans Should Be Able to Hold Financial Institutions Accountable for Wrongdoing

Statement of Lisa Gilbert, Vice President of Legislative Affairs, Public Citizen

Note: Today, U.S. Sen. Mike Crapo (R-Idaho) and U.S. Reps. Blaine Luetkemeyer (R-Mo.) and Keith Rothfus (R-Pa.), along with several dozen co-sponsors in both chambers, introduced Congressional Review Act (CRA) resolutions blocking the U.S. Consumer Financial Protection Bureau’s (CFPB) recently finalized arbitration rule. Under the CRA, Congress can pass legislation with a simple majority vote that would strike down a rule within 60 days after it is finalized. The CRA introductions follow a new poll showing that three out of four voters support the CFPB’s mission and that two out of three voters back the ban on forced arbitration rip-off clauses in consumer financial contracts.

Big banks and other financial entities such as payday lenders bury “rip-off clauses” in the fine print of take-it-or-leave-it contracts to block class-action lawsuits and push disputes into secret and rigged proceedings biased toward companies. Since few consumers can afford to fight small-dollar disputes by themselves, banks can trick and trap customers with illegal charges and then pocket billions in stolen money. Without class-action lawsuits to keep things fair, corporate bad actors will get off scot-free when harming their customers. The CFPB took a critical step toward protecting the public with this long-awaited rulemaking, and members should consider which side of history they want to be on: for Main Street consumers or the big banks. This unpopular and ill-advised CRA challenge must be defeated.