October 25th, 2017 by WCBC Radio

WASHINGTON – Today U.S. Senator Chris Van Hollen issued the following statement after Senate Republicans voted to block the Consumer Finance Protection Bureau’s (CFPB’s) mandatory arbitration rule through the Congressional Review Act.

 

“We have seen countless scandals where companies try to take advantage of consumers and then deny them their right to legal action – including recent incidents with Wells Fargo and Equifax” said Senator Van Hollen, a member of the Senate Banking Committee. “CFPB took action to protect Americans and prevent companies like Equifax and Wells Fargo from scamming their customers. But today, Republicans turned back that important progress. They voted to protect corporations and special interests instead of American families. When consumers get hurt, we shouldn’t add insult to injury by letting these massive companies off the hook. The Republicans’ obstruction of these crucial consumer protections is shameful.”

 

BACKGROUND:

 

Big companies and financial institutions often include mandatory arbitration clauses when you sign up for services, which limit your options if you have a legal issue and want to sue. In fact, a 2015 study by the CFPB found that mandatory arbitration clauses have a significant dampening effect on both the number of claims and the average amount recovered. The CFPB estimates that 32 million consumers are eligible for relief through class action settlements in federal court each year and an average of at least $220 million per year is paid out to consumers from these settlements – but over a two-year period, it found that only 1,847 arbitration disputes and 3,462 individual lawsuits were filed.

 

Recognizing the need to protect consumers, the CFPB’s arbitration rule made it easier for consumers to file or join an existing group lawsuit if they are harmed by a financial service provider. This rule will prevent widespread fraud and abuse, ensuring that consumers who are harmed have the right to seek relief. The need for this was made ever more clear in the wake of the Equifax breach. Not only did Equifax expose sensitive financial information of up to 143 million Americans – including over 3 million people in Maryland. The company then tried to trick their customers into giving up their legal rights by signing up for their free credit monitoring services.

 

With this vote, Republicans have given companies like Equifax the right to scam their customers and block people’s right to sue if they’ve been wronged.