By Jessica Silver-Greenberg and Michael Corkery | The New York Times
The nation’s consumer watchdog is adopting a rule on Monday that would pry open the courtroom doors for millions of Americans, restoring their right to bring class-action lawsuits against financial firms.
Under the Consumer Financial Protection Bureau rule, banks and credit card companies could no longer force customers into arbitration and block them from banding together to file a class-action suit.
The change would deal a serious blow to Wall Street and could wind up costing financial firms billions of dollars.
“I agree with the CFPB that everyone deserves their day in court and to have a fighting chance to challenge a corporation’s practices. Without accountability, some companies have pursued profit at the expense of consumers. These companies know their consumers have no practical way to challenge a huge corporation without the benefit of the very class action process the corporation took away from them through pages of fine print terms and conditions that most people never read, and even if read, had no way to negotiate for fairer terms. Most consumers also don’t know they have little chance of prevailing in forced arbitration or they cannot force a company to change its practices through arbitration, even if they are successful.
“Class actions are necessary to protect consumers. Unfortunately, Congress now has sixty legislative days to overrule this rule if it doesn’t want consumers protected. If the rule survives this congressional review period, it will become law and will apply to new consumer contracts with financial institutions.”