Consumer advocate Ralph Nader is calling on President Donald Trump to veto legislation that would overturn a Consumer Financial Protection Bureau (CFPB) rule prohibiting forced arbitration.
“If you truly care about consumers you should veto this mean-spirited and unjust bill, which is nothing more than a gift to the unprincipled perpetrators of financial abuses,” Nader wrote in a letter to Trump. “Thousands of gouged service members and veterans will not forget you turning your back on them, year after year, should you sign this cruel bill.”
“President Trump, there can be no free market without freedom of contract. The Senate’s action to limit consumer rights is a blatant example of crony capitalism,” Nader wrote. “Unbridled corporatism has stripped consumers of their freedom of contract with fine-print, standard-form contracts that become more dictatorial every decade. Consumers are living in a state of contract peonage. Consumer groups throughout the country have documented the problems with forced arbitration and have advocated against these unfair provisions.”
“Your supporters and countless other Americans will be harmed by the Senate’s cruel and disingenuous vote.”
Dennis Kelleher of Better Markets said that “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,” Kelleher said. “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,” Kelleher said. “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.”