Earlier this month, the Consumer Financial Protection Bureau rolled out a new rule that bans companies from using arbitration clauses intended to prevent class action suits. These clauses, typically included in contracts used by credit card and banking companies, usually stipulate that the company or consumer can raise issues using an arbitrator or on an individual basis in small claims court.
“I think it will give a larger group of individuals more access to the court system for going after banks for these small infractions,” Gantenbein Law managing attorney Keith Gantenbein said. “If you take a dollar wrong just one time, no one is going to sue you over that. But if you do it 100,000 times, that adds up.”
The rule bars lenders from using an arbitration clause that, in effect, prevents consumers from joining class action suits. It also requires companies to submit records, including claims and awards in individual arbitration proceedings.
The rule has not been popular among conservatives since the bureau first sought comment on the proposed regulation last May. GOP House Financial Services Committee Chairman Jeb Hensarling and Sen. Tom Cotton, along with senior U.S. Chamber of Commerce officials and bank lobbying groups, have called for its repeal. Several members of the Senate Bank-ing Committee introduced a resolution Thursday to repeal the rule.