FOR IMMEDIATE RELEASE
Wednesday, October 25, 2017
Contact: Nick Jacobs, 202-618-6430 or njacobs@bettermarkets.com
Washington, D.C. – Dennis Kelleher, President and CEO of Better Markets, issued the following statement in response to the vote in the U.S. Senate to throw out the Consumer Financial Protection Bureau’s (CFPB) rule prohibiting forced arbitration:
“Forcing American consumers into arbitration is a very bad development for every American with a credit card, bank account or other financial product because they can be ripped off and have no effective way to get compensated. Joining other ripped off Americans in a class action lawsuit is the only way consumers can get relief, prevent financial institutions from pocketing tens of millions of dollars in ill-gotten gains, and stop financial predators.
“If arbitration was half as good as the industry claims it is, it wouldn’t have to be forced on ripped off consumers in small print legalese buried in very long complicated contracts. Consumers would choose arbitration if it was genuinely low cost, fair and speedy. It’s not. Consumers know it; industry knows it; and those who voted to force them into arbitration know it.
“Arbitration proceedings are conducted in secret, biased toward the financial industry, and unfair to consumers. This is particularly true for consumers who are ripped off in relatively small amounts, often $20, $50 or $100. It is never worth it to individual consumers to alone take on gigantic financial institutions and their army of lawyers for such small amounts. The result is that financial institutions get to pocket all the money ripped off, which often amounts to tens of millions of dollars ripped off in small amounts. Worse yet, when financial institutions are not held accountable, they don’t have the incentive to change their bad practices or stop ripping off consumers.
“This is what happened in the years before the 2008 financial crash. Financial predators ripped off unsuspecting and unprotected mortgage consumers who were victims of egregious fraud. Federal regulators did nothing and they stopped state regulators from enforcing their state consumer protection laws. A result was rampant predatory lending that inflated the subprime bubble that crashed the financial system. The risk of that happening again just increased.”
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.
