Published: March 2015

Consumer advocates come out against forced arbitration clauses

Coalition: National Association of Consumer Advocates (NACA)

Following a report released by the Consumer Financial Protection Bureau (CFPB) showing that tens of millions of Americans have clauses in their credit card, checking account, student loan and wireless phone contracts that take away their rights to sue those companies in a court of law, Consumer Action joined over 100 advocates in urging the CFPB to address the use of forced arbitration clauses by prohibiting their use in consumer-held contracts.

According to a report released earlier this month by the Consumer Financial Protection Bureau (CFPB), 53% of credit cards currently have arbitration clauses, 92% of prepaid debit cards are subject to arbitration, and 99% of all payday loans in California and Texas include the restrictive clauses. More than 93% of consumers under these clauses have no idea if their credit card, checking account, student loan or cell phone contract includes a forced arbitration, which bans them from suing the company in open court. The report also found that most arbitration clauses include a ban on class actions – a tactic that has been frequently utilized by credit card companies as a way to preempt group litigation.

The CFPB’s report triggered consumer advocates to come out in support of the findings, siting it as the proof needed to show the financial industry acts with impunity, largely ignoring consumer protection laws. Advocates argue that class actions often are the only economically feasible way consumers can seek financial and legislative remedies for violations.

Other Organizations

AFL-CIO | AFSCME | Alliance for a Just Society | Alliance for Justice | American Civil Liberties Union | Americans for Financial Reform | Center for Economic Justice | Center for Justice & Democracy | Center for Responsible Lending | Citizen Works | Committee to Support the Antitrust Laws | Consumer Action | Consumer Federation of America | Consumer Watchdog | Consumers for Auto Reliability and Safety | Consumers Union | Economic Analysis and Research Network (EARN) | Homeowners Against Deficient Dwellings | The Leadership Conference on Civil and Human Rights | NAACP | National Association of Consumer Advocates | National Consumer Law Center (on behalf of its low-income clients) | National Consumer Voice for Quality Long-Term Care | National Consumers League | National Council of La Raza | National Employment Lawyers Association } National Fair Housing Alliance | Other 98% | Public Citizen | SEIU | Southern Poverty Law Center | The Employee Rights Advocacy Institute for Law & Policy | The Institute for College Access & Success (TICAS) | U.S. PIRG

More Information

For more information on the study, please visit the CFPB.

For more information on forced arbitration, please visit NACA.

To read the coalition's letter to the CFPB, please click here.

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