Even after Equifax and Wells Fargo, GOP sides with big financial institutions - by Elizabeth Warren
By Elizabeth Warren OCTOBER 16, 2017
The Equifax data breach and the Wells Fargo fake accounts scandal have given America a peek into business practices at some of America’s biggest financial institutions. In both companies, a related practice popped to the surface: forced arbitration clauses.
These little clauses, often buried in a fog of fine print, are a way for the companies to slither out of accountability when they cheat their customers. And Senate Republicans are on the verge of ramming through a resolution that will allow companies like Equifax and Wells Fargo to continue using these tricks to get away with even more misconduct.
Here’s how the trick works: Let’s say you discover an unexplained $20 fee on your credit card statement. You call, spend a long stretch on hold, get shuffled from person to person, and, finally, learn that your credit card company won’t remove the fee. What now? If your credit card company cheated you out of $20, there’s a good chance it cheated a lot of other customers out of $20. So you can join — or start —a class action, which gives you the chance to go to court and get your money back. It’s not a lot of money, but add up all the people in the class action, and the company feels some real heat if they cheat a lot of their customers. But if your credit card contract contains a forced arbitration clause, you can’t go to court. Instead, your only option is to pony up $200 to file an arbitration claim. No one is going to pay $200 to try to recover a $20 fee — and your credit card company knows it. That means it can get away with cheating you on small fees forever. And it can juice its profit by cheating millions of its other customers too.
Forced arbitration is bad for consumers. That’s why the Consumer Financial Protection Bureau (CFPB) issued a new rule earlier this year that limits the use of forced arbitration clauses in financial contracts and lets consumers join class action lawsuits if they get cheated.
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http://www.bostonglobe.com/opinion/2017/10/16/even-after-equifax-and-wells-fargo-republicans-are-still-siding-with-big-financial-institutions/ZBkUSbufEz1fQ4XWK2S94O/story.html