No More Forced Arbitration

It looks like the Consumer Financial Protection Bureau is going to ban the use of forced arbitration clauses when signing up for financial services and finally restore the customer's right to bring class-action lawsuits. As you might remember, Wall Street fought the creation of this agency tooth and nail when it was proposed and passed as part of Dodd-Frank, spending millions on lobbying and then making sure that Elizabeth Warren, who was the brainchild of the bureau, did not become its head. It seems outrageous that you have to sign away your legal rights when you do something as basic as open a bank account or sign up for a credit card. As the article points out, since consumers are unable to pool their resources and are required to fight their case on their own, most claims are eventually abandoned. And, even when cases get to arbitration the deck is stacked against the consumer as the companies get to choose the arbitrator! In a case study in California, credit card companies won in arbitration 95% of the time. Unfortunately, the new rule will not be retroactive to existing contracts and does not include other areas where forced arbitration clauses are used, such as home builder and even employment contracts. I see that Forbes has already called this rule a give-away to lawyers and, as their article further states, the battle against the agency's existence continues until this day in court. Knowing the power and tenacity of Wall Street and big business in general, I'm sure this fight will continue in the years ahead.