GOP Senate and Trump Administration Vote to Kill CFPB Rule Limiting Use of Binding Arbitration Clauses
- October 25, 2017
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In a 50/50 tie, broken only by the vote of VP Pence, Senate Republicans and the Trump Administration voted to allow corporate abuses to continue with little to no accountability to consumers.
Among the primary ways corporations, financial institutions in particular, get away with unscrupulous and abusive business practices is by forcing aggrieved consumers into binding arbitration and away from the courts. Binding arbitration is the privatization of the justice system. In virtually every consumer contract you sign, you are giving up your right to pursue relief in a court of law and instead are only left with private, confidential arbitration. Often, the high costs of arbitration are borne by both parties and so essentially unavailable to most consumers. Worse yet, these same arbitration clauses preclude consumers for marshalling their resources and banding together to pursue relief in class action claims.
The banks and other corporations have fought to protect arbitration so they can continue their abusive business practices with little to no accountability. This issue has made front page news lately when Wells Fargo and Experian’s abuses were revealed.
The Consumer Financial Protection Bureau, a government agency with the singular mission of protecting consumers from corporate abuse, recognized the harm forced arbitration was doing to consumers. The CFPB enacted rules limiting the use of arbitration clauses in some consumer contracts in the financial services space.
Last night, 50 republican United States Senators and Vice President Pence in a party line vote sided with the banks and voted to kill the CFPB arbitration rule.