Financial Services’ Use of Forced Arbitration Hurts Communities of Color, Low Income Communities
Washington, D.C. — Today, Public Citizen released a new report revealing that the forced arbitration clauses routinely included in the agreements for financial services products — including credit cards; money transfer services; and buy now, pay later products — disproportionately harm communities of color and contribute to intergenerational wealth gaps.
“Communities of color already face significant barriers to economic stability — and forced arbitration clauses imposed by financial services providers only exacerbate the disparity,” said Candace Milner, racial equity policy associate with Public Citizen and co-author of the report. “A justice system in which low-income Americans and communities of color are routinely prevented from accessing the courts should alarm and appall every American.”
“Forced arbitration clauses are predatory and abusive,” said Martha Perez-Pedemonti, civil justice and consumer rights counsel for Public Citizen and report co-author. “The Consumer Financial Protection Bureau has the authority and responsibility to act to ban the practice and ensure that corporations are not allowed to escape accountability in the courts.”
Top findings of the report include:
- Arbitration systems are further out of reach for low-income BIPOC communities because they are procedurally inaccessible and lack the resources to accommodate marginalized communities
- Forced arbitration provisions harm low-income BIPOC families by forcing them to engage with arbitration firms that do not provide adequate resources to support low-income BIPOC individuals. In contrast, state and federal courts offer more diverse judges and juries than the decision-makers at arbitration firms, and also offer access to public assistance programs and accessibility services.
- Banning forced arbitration in financial services, as the Consumer Financial Protection Bureau (CFPB) has the authority to do, would be the first step toward granting consumers access to equitable and financial relief.
To request an interview with the report’s authors or to learn more about Public Citizen’s work to ban forced arbitration, contact Emily Leach at eleach@citizen.org.