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The Consumer Financial Protection Bureau unveiled a proposed rule torestrict the use of arbitration clauses in consumer financial contracts, a step that would shift power to consumers for a wide range of financial products from credit cards to bank accounts to private student loans. Although this move places a burden on financial institutions who may now face class-action suits instead of smaller scale arbitration cases, the rule by the CFPB allows consumers to act without fear when there is an injustice.
“Signing up for a credit card or opening a bank account can often mean signing away your right to take the company to court if things go wrong,” CFPB Director Richard Cordray said in a news release Thursday. He said the proposed rule would restrict forced arbitration that “effectively denies groups of consumers the right to seek justice and relief for wrongdoing.”
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