Sometimes they are called “pre-dispute arbitration clauses,” sometimes they are called “mandatory binding arbitration clauses,” but they are still the same thing—forced arbitration. These clauses are hidden in contracts given to consumers by big banks and credit card companies, and they prevent you from taking these institutions to court if you have been wronged. It’s a trend that the Consumer Financial Protection Bureau (CFPB) is trying to curtail, but the banks aren’t ready to give up this so called “get-out-of-jail free card.”
Banks Fight For Forced Arbitration: Why You Should Be Worried
Hidden deep within the Financial Services and General Government Appropriations Act is a tiny section called Sec. 632—the Womack-Graves Amendment. The small part of the 162-page document would block the CFPB from using its funding to restrict the use of forced arbitration clauses. The bill writers claim that enough research has yet to be done on the subject, but the team over at the CFPB have been at the grindstone on this topic for years.
How Long Was The CFPB Study?
The original CFPB investigation started in 2012 and lasted till 2015, which is when it released a report that recommended the limitation of forced arbitration clauses. These clauses block class action suits and allow companies to get away with hurting consumers. Other research has also come to the same conclusion, but several financial institutions don’t want to see such regulation, and so they have lobbied to enact laws that would prevent the CFPB from protecting you.
Colson Hicks Eidson’s Julie Braman Kane has spoken out against the practice of forced arbitration. She says, “Whether you’re signing a loved one into a nursing home or just signing up for Netflix, you shouldn’t have to give your legal rights away… The big corporations probably aren’t going to give up this get-out-of-jail card they’ve discovered. It’s going to have to be taken away from them.”
