HAF Applauds Proposed Rule Restricting Forced Arbitration
Washington, D.C. (August 23, 2016) — The Hindu American Foundation (HAF) joined together with 280 consumer, civil rights, labor, community, and non-profit organizations to emphasize strong and broad-based support for the Consumer Financial Protection Bureau (CFPB)’s proposed rule to restrict the financial industry’s use of forced arbitration.
In a joint comment letter submitted on the final day of the rule’s public comment period, the groups lauded the proposal as “a significant step forward in the ongoing fight to curb predatory practices in consumer financial products and services and to make these markets fairer and safer.”
In forced arbitration, banks and lenders bury so-called “ripoff clauses” in the fine print of take-it-or-leave-it contracts to ensure that all customer disputes are decided by a private firm of the financial company’s choice rather than an impartial judge or jury, with limited ability to appeal. Most financial ripoff clauses also include class action bans that block consumers from joining together to challenge systemic abuses as a group.
The CFPB proposed this rule limiting forced arbitration in May after its comprehensive 2015 study documented that the practice effectively eradicates consumer claims. The letter’s signers praised the rule’s provisions to “restore crucial class action rights that deter systemic abuses” by prohibiting class action bans.
While the CFPB’s current proposal would not end all forms of forced arbitration, “This rule promotes transparency and greater consumer protections,” said Samir Kalra, HAF Senior Director. “We need to make sure that the playing field is not skewed towards corporations, and this rule certainly helps to promote consumer rights,” Kalra added.
The CFPB’s proposed rule has generated at least 100,000 supportive comments from individual consumers across the country. It has also received enthusiastic support from over 100 members of Congress in separate House and Senate letters, 18 state attorneys general, state legislators from 14 states, and 210 law school professors.