CFPB wants to make it easier for customers to sue banks

by Ryan Smith09 May 2016
The Consumer Financial Protection Bureau has proposed a rule that would make it a lot easier for customers to sue their banks.

The CFPB’s proposed rule would prohibit binding arbitration clauses. If enacted, the rule would affect hundreds of millions of bank accounts, credit cards and other financial products and services, according to an Associated Press report.

Often, bank customers have unknowingly signed away their right to sue the bank. Binging arbitration agreements – which force customers to settle disputes through a third-party mediator – are often buried in the fine print of financial agreements, the AP reported.

The CFPB wants to change that process.

“Many banks and financial companies avoid accountability by putting arbitration clauses in their contracts that block groups of their customers from suing them ... (which) effectively denies groups of consumers the right to seek justice and relief for wrongdoing,” said CFPB Director Richard Cordray.

The ban would apply only when customers want to create or join a class-action suit; individual customers could still be forced to settle disputes through arbitration.

But the financial industry, which stands to lose billions if the rule is enacted, said banning arbitration will only benefit class-action lawyers, the AP reported.

“Arbitration has long provided a faster, better, and more cost-effective means of addressing consumer disputes than litigation or class action lawsuits,” said Richard Hunt, president of the Consumer Banker Association. “The real winners of today's proposal are trial attorneys, not consumers.”

COMMENTS

  • by | 5/9/2016 11:22:53 AM

    I am fine with this if banks also have the right to sue the CFPB and the Treasury Department and/or have the right for recover legal fees for false claims and legal charges from these agencies. Who would want to lend money to anybody in this Salem Witch Trial environment. Many (but not all) of these fines from the CFPB do not rectify and wrongs rather the funds collected go back to the particular agency to further feed their out of control growth. It becomes self-sustaining and of course the average person is hurt in higher lending costs and and in not being able to get a mortgage for fear of the bank's being sued in making that mortgage. This is what happens when government becomes the primary player in the overall economy. Hence, government economists clapping their hands with a .5% GDP number. Disgraceful!

  • by JCRussell | 5/9/2016 11:38:39 AM

    Class action lawyers are licking their chops......They can make millions while class members get a check/voucher/account credit for $2.13.....

  • by | 5/9/2016 11:54:55 AM

    Number one should be a class action suit for Borrowers who are steered to the in house lender who is being paid a handsome fee for their unethical kickback in the form of a Marketing agreement and the in house lenders rates are much higher than what the borrower could receive if they shopped. I know I know the old saying is they could shop with whoever they want but the big issue is that most of these buyers have no idea that the realtor is referring them to a company whose rates are so high to cover the cost of these agreements. These should be stopped or at least have the in house lenders have a competitive price. Right now we are seeing local companies who are in these agreements charging between a 1/4% to a 1/2% higher rate. The borrower puts there faith in the realtor who in reality is screwing the client. These should be stopped immediately but maybe a class action lawsuit will do the trick. Please do not use the argument that we are complying we all know they are just a kickback no matter how you slice and the only benefitting are the mortgage mortgage officer who is in the agreement the mortgage company and the Owner of the Real Estate company. What is compelling is the realtor who is referring the client gets little in return.

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