Consumer Protection Provision Struck Down
At Loan Lawyers we pay close attention to all changes to the law in the area of consumer protection, not only the good. You may have read the blog entry we wrote for March of this year about how the changing political climate may affect the rule making authority of the Consumer Protection Financial Bureau (CFPB) and how we were concerned that its ability to protect members of the public might be struck down. In May of this year we wrote about a new CFPB rule about ending mandatory arbitration in agreements from large financial institutions and banks. You may have also heard news stories in the last few weeks about how banks were now “immune” to lawsuits. This blog entry will explain what has actually happened.
What happened in the past? It is common for large companies and large financial institutions to include mandatory arbitration provisions in contracts as well as contracts which forbid class action lawsuits. This makes it easy for large financial institutions to steal from members of the public, as long as they only steal a little bit from everyone. To use a slightly dated reference, do you recall Superman 3 where fractional cents were stolen from many bank accounts and combined? The underlying idea is the same except that large institutions steal a lot more than just a few cents from everyone. Have you ever had a charge on your phone or cable bill that you thought was wrong? Was it for a tiny amount? Did the cable company fix it? Would you actually sue them over $10? Of course you didn’t, no one would. No one on their own would ever bother suing to recover such a small sum, but if everyone that a cable company ripped off sued them together, as a class, they can be represented by one group of lawyers and thus it becomes economical. Class action lawsuits are an important tool to stop bad actors from stealing from the public and without them small thefts go unpunished. The only other choice is for a member of the public to file a lawsuit over a tiny amount of money, something they would never do on their own.
The CFPB was in the process of issuing rules to bar mandatory arbitration provisions and which would bar contract clauses that barred class action claims. It did not get a lot of attention but it was one of the most important events in consumer protection news in the last year. These provisions were recently struck down by congress on strictly partisan lines, killing the rule and limiting the CFPB’s future rule making authority.
There have been news stories recently saying that no one can sue banks anyone. Does this mean no one can sue banks? No. Our office has sued multiple banks this past week. We sue banks almost every week. However what it means is that it will be harder for lawsuits to be brought against banks for very small claims. If you believe that you have a legal claim against a financial institution for misconduct, contact our office. Even if it is for a very small claim. We have filed many hundreds of lawsuits and made large recoveries for our clients. The law striking down the CFPB rule stopped class actions claims but does not directly affect what we do at Loan Lawyers.
If you would like to read more about the FDCPA and consumers fighting back against debt collectors, you can find other stories on our blog.
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This document has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. Please consult your attorney in connection with any legal issues related to the matters discussed in this article as the applicability of state, local and federal laws may vary.