Oct. 23, 2017
Treasury Report Sides With Equifax and Wells Fargo Against Ripped-Off Customers
Statements From Experts at Public Citizen and Americans for Financial Reform
“It’s no surprise to see the Steven Mnuchin-led U.S. Treasury Department aim to parachute into the forced arbitration dispute to sabotage the rule on behalf of big banks. Treasury’s main complaint is that the U.S. Consumer Financial Protection Bureau (CFPB) rule will enable consumers to seek effective remedy against corporate wrongdoers. This is true – but it’s precisely the purpose of the rule.
What Treasury’s so-called analysis fails utterly to grapple with is that consumers have no effective redress in individualized arbitration, especially for small-dollar rip-offs affecting a broad range of people. Class-action lawsuits advance justice by transferring ripped-off money back to consumers (and attorneys are paid only if they recover for their clients). The Treasury Department’s report treats this feature as a bug. Effective remedies deter financial industry wrongdoing, while fake remedies encourage more rip-offs and abuses.
Treasury might better have titled its report ‘Enabling Wells Fargo, Equifax and Other Wrongdoers.’”
- Robert Weissman, president, Public Citizen
“The Treasury report willfully ignores the fact that class actions returned $2.2 billion to consumers between 2008-2012 – after deducting attorneys’ fees and court costs. That hardly seems like ‘no relief.’ What’s more, the Economic Policy Institute found that the average consumer who goes to arbitration ends up having to pay their bank or lender $7,725 in fees. It is clear that consumers derive benefits from class-action lawsuits and lose when forced into secret arbitration.”
Real world experience makes it clear that if Wall Street banks save money by avoiding litigation – whether that’s court costs or attorneys’ fees – that money stays in their own pockets. The rest of us continue to pay the costs of consumer rip-offs, which forced arbitration protects as a workable business model.”
- Lisa Donner, executive director, Americans for Financial Reform