A new rule proposed by the Consumer Financial Protection Bureau would let consumers sue banks over a variety of financial products, including bank accounts, private student loans, money-transfer services, installment loans, payday loans, prepaid cards, and credit cards, and certain types of loans. The proposed rule would also prohibit arbitration clauses in consumer financial contracts, again giving more power to consumers.
The CFPB wants to prevent financial companies from employing mandatory arbitration clauses so as to inhibit class action securities cases involving significant quantities of plaintiffs. However, they would still be allowed to obligate consumers to resolve individual disagreements in arbitration. Companies that decide to include arbitration clauses in their contracts would have to notify the CFBP about the specifics of cases, including any awards and claims.
The CFPB said that according to a study it conducted in 2015, arbitration clauses were found in “hundreds of millions of consumer contracts” used by credit card users, private student loan lenders, banks taking insured deposits, as well as in prepaid card agreements and payday loan contracts in certain states.