FOR IMMEDIATE RELEASE: JULY 11, 2017
South Carolina Appleseed Legal Justice Center Contact: Sue Berkowitz ([email protected]);
National Consumer Law Center Contacts: Lauren Saunders ([email protected]) or Stephen Rouzer ([email protected]); 202.595.7847
CFPB Rule Restores South Carolinians’ Day in Court Over Financial Misconduct
Rule Addresses Forced Arbitration of Claims Involving Credit Cards, Payday Loans, Other Financial Products
(COLUMBIA) Today, South Carolina and national advocates along with an eminent scholar of arbitration law applauded the Consumer Financial Protection Bureau’s (CFPB) final rule that restores consumers’ right to join together in class actions to hold banks, payday lenders and other companies accountable when they break the law.
“The CFPB’s rule restores ordinary folks’ day in court for widespread violations of the law. Forced arbitration is simply a license to steal when a company like Wells Fargo commits fraud through millions of fake accounts and then tells customers: ‘Too bad, you can’t go to court and can’t team up; you have to fight us one by one behind closed doors and before a private arbitrator of our choice instead of a public court with an impartial judge,’” said Lauren Saunders, associate director of the National Consumer Law Center.
The final rule prohibits credit card companies, banks, student lenders, payday lenders, debt collectors, credit reporting companies, and other financial companies from using forced arbitration clauses that ban consumers from participating in class actions—which is often the only way to hold violators accountable. The rule also increases transparency for individual forced arbitrations by requiring those cases to be reported to the CFPB.
“Forced arbitration clauses stop consumers in South Carolina from protecting themselves by taking away their day in court,” said Sue Berkowitz, director of the South Carolina Appleseed Legal Justice Center. “The CFPB rule on arbitration and bans on class action restores consumer access to justice and levels the playing field for good companies by addressing violations by bad actors.”
Support for a rule to stop forced arbitration clauses with class action bans is widespread. Some conservative legislators who are concerned about regulations have also supported the importance of class actions as a “market-based solution that targets enforcement at bad actors engaged in widespread wrongdoing.”
Financial lobbyists are expected to push Congress to block the arbitration rule. “Will any member of Congress dare to look a victim of Wells Fargo’s fake account scandal in the eye and tell them that the bank should be able to use forced arbitration to deprive them of their day in court or their right to join a class action?” asked Lauren Saunders, associate director of the National Consumer Law Center. “People are entitled to their day in court when companies break the law.”
More information on NCLC’s body of work regarding:
- Arbitration and access to justice: http://www.nclc.org/issues/arbitration-a-access-to-justice.html
- Payday loans: https://www.nclc.org/issues/payday-loans.html.
NCLC is a member of the Fair Arbitration Now coalition that works to oppose forced arbitration.
South Carolina Appleseed Legal Justice Center is a forceful and respected advocate for low-income South Carolinians on issues such as housing, education, hunger, public benefits, domestic violence, immigration, healthcare and consumer issues.
Since 1969, the nonprofit National Consumer Law Center® (NCLC®) has used its expertise in consumer law and energy policy to work for consumer justice and economic security for low-income and other disadvantaged people, including older adults, in the United States. NCLC’s expertise includes policy analysis and advocacy; consumer law and energy publications; litigation; expert witness services, and training and advice for advocates. NCLC works with nonprofit and legal services organizations, private attorneys, policymakers, and federal and state government and courts across the nation to stop exploitative practices, help financially stressed families build and retain wealth, and advance economic fairness. www.nclc.org