In July of 2017, the Consumer Financial Protection Bureau banned class action waivers in financial firms’ arbitration clauses. Many banks, credit card companies and investment firms deter customers from pursuing group lawsuits by including such clauses within the fine print for many financial products, such as credit cards and student loans. From CFPB’s point of view, claims made in individual arbitrations make little financial sense, so they are rarely filed. Class actions, however, allow billions of dollars to be recovered for consumers. According to former CPFB Director Richard Cordray “Consumers should not be asked to sign away their legal rights when they open a bank account or credit card…Companies are using the arbitration clause as a free pass to sidestep the courts and avoid accountability for wrongdoing.”
A few months later, in November of 2017, this ban was withdrawn by Congress. This withdrawal makes it nearly impossible for consumers to get relief when a relationship with a large corporation goes wrong, and permits the large corporations to avoid the court system and continue harmful consumer practices.