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The Opposite of Consumer Protection

On Tuesday, July 26, 2017 the House considered H.J. Res. 111, Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by Bureau of Consumer Financial Protection relating to “Arbitration Agreements”. The Dodd-Frank Wall Street Reform Act, which established the Consumer Financial Protection Bureau (CFPB), mandated a study of the impact that forced arbitration has on consumers. Policies of forced arbitration require consumers to agree that they will enter into arbitration instead of suing or joining a class action lawsuit if problems arise with financial products. So, before a consumer is approved for a credit card or a student loan or other financial product, they must relinquish their rights to sue.

The CFPB completed its study showing that forced arbitration adversely affects consumers and issued a rule prohibiting financial institutions from imposing it as a condition of access to their products. The rule was published in the Federal Register just last week. House Republicans are rushing this resolution without debate or committee review. Republicans are again using the Congressional Review Act (CRA) to thwart regulatory action. Moreover, by taking this approach, the rule can never be considered again, even under a different administration. One of the problems with forced arbitration is that many consumers don’t even realize they have agreed to it and if they do object, the financial institution can simply refuse to do business with that customer. Big corporations insist on this in order to avoid expensive litigation. Wells Fargo is a good example of this practice at work for big banks. It opened millions of accounts without the knowledge or consent of the customers whose names were on those accounts. When some tried to sue, their cases were dismissed because of the forced arbitration clause in their contract. I spoke twice on the floor about this:

I voted NO. H.J. Res. 111 passed and the entire vote is recorded below:

• H.J. Res. 111 on Congress.gov
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