New class action rules will make it easier to sue your bank
Business
New class action rules will make it easier to sue your bank
If government regulators get their way, it’s going to become a lot easier to sue your bank. The Consumer Financial Protection Bureau has proposed long-awaited new rules that could prevent financial institutions from blocking customers from filing class-action lawsuits. By and large, U.S. bank customers have signed away their right to sue their bank in court, often without being aware of it. Class-action bans, often buried in the fine print of legal disclosures on everything from bank accounts to student loans, make it practically impossible for consumers with small claims to band together.
[Class-action waivers] have destroyed and made ineffective the ability of individual consumers to challenge corporations. They know they aren’t going to be challenged because individuals generally do not spend time or money to do this.
Andre Regard, a consumer law attorney in Lexington, Ky.
The new rule would ban arbitration clauses, which would affect the entire financial industry and the hundreds of millions of bank accounts, credit cards and other financial services Americans use. The CFPB’s proposal does have a significant limitation. The ban would only apply when consumers want to create or join a class-action lawsuit. Financial companies will still be able to force individuals to settle disputes through arbitration. Consumer advocates have long decried the cooling effect that mandatory arbitration and class-action ban clauses have on customers seeking financial relief for small claims. The financial industry has long argued that arbitration is a more efficient way for customers to resolve disputes with banks and is expected to fight the CFPB’s proposal hard.
The real winners of today’s proposal are trial attorneys, not consumers.
Richard Hunt, president of the Consumer Bankers Association
