Changes for Consumer Suits Against Banks on the Horizon

Originally published by By Scott Armstrong.

The Bureau of Consumer Financial Protection recently issued a proposed rule that would restore consumers’ rights to bring class-action lawsuits against financial firms, such as banks and credit card companies. The proposed rule would prevent enforcement of arbitration clauses requiring consumers to present their disputes to private arbitrators favorable to the financial firms.

The proposed rule follows the Bureau of Consumer Financial Protection’s March 2015 Report to Congress outlining the impacts of forced arbitration clauses on disputes between consumers and their financial institutions. For years, banks, credit card companies, and other financial institutions have forced arbitration clauses on their customers that prevent consumers from suing in court. Instead, consumers whose financial institutions require arbitration clauses are must present disputes in arbitration under rules favorable to the financial institutions. Importantly, many arbitration clauses also prohibit consumers from suing together or presenting a class action suit. This has the effect of limiting the exposure faced by financial institutions accused of wrongdoing to only those consumers who have the resources to present their claims in arbitration. Additionally, financial institutions routinely require that arbitrated disputes be confidential, which prevents public disclosure of corporate wrongdoing and keeps the arbitration decisions, such as who won and who lost, a secret.

The Bureau of Consumer Financial Protection’s proposed rule would help restore consumers’ right to have their dispute decided by a jury of their peers. The Bureau is currently seeking public comment on the proposed rule. Should it become law, the new rule would provide consumers with a day in court, help deter bad conduct by financial institutions, and increase transparency in the dispute process.

If you or someone you know is in need of an experienced team of consumer attorneys, contact Abraham, Watkins, Nichols, Sorrels, Agosto & Friend by calling 713-222-7211 or toll free at 1-800-870-9584.

Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.

from Texas Bar Today http://ift.tt/1s4RO3P
via Abogado Aly Website