Feds Want to Help You Sue Banks, Credit Card Companies

What's Hot

How to Cut the Cable TV Cord in 2017Family

8 Major Freebies and Discounts You Get With Amazon PrimeSave

8 Creative Ways to Clear ClutterAround The House

Study: People Who Curse Are More HonestFamily

This Free Software Brings Old Laptops Back to LifeMore

Pay $2 and Get Unlimited Wendy’s Frosty Treats in 2017Family

Protecting Trump Will Cost Taxpayers $35 MillionFamily

The 3 Golden Rules of Lending to Friends and FamilyBorrow

6 Reasons Why Savers Are Sexier Than SpendersCredit & Debt

Resolutions 2017: Save More Money Using 5 Simple TricksCredit & Debt

Porta-Potties for Presidential Inauguration Cause a StinkFamily

Tax Hacks 2017: Don’t Miss These 16 Often-Overlooked Tax BreaksTaxes

5 New Year’s Resolutions That Will Pay Off 10 Years From NowCollege

The Consumer Financial Protection Bureau has announced a proposed new regulation that would help consumers bring class-action lawsuits against financial institutions.

Big Government wants to make it easier for you to sue Big Business.

The Consumer Financial Protection Bureau, or CFPB, is seeking public comment on a proposed new regulation that, if enacted, would enable consumers to bring class-action lawsuits against financial institutions.

Specifically, the proposal would ban a certain type of legal language, called a mandatory arbitration clause, that often appears in contracts for financial products like bank accounts and credit cards.

Generally, these clauses state that the financial institution or individual consumer can require disputes between them to be resolved via a third-party arbitrator rather than the court system, unless the dispute is a small-claims case. The clauses also usually prevent groups of consumers from filing class-action lawsuits, according to the CFPB.

In a news release issued Thursday, CFPB Director Richard Cordray refers to arbitration clauses as a “contract gotcha that effectively denies groups of consumers the right to seek justice and relief for wrongdoing.”

Cordray explains:

“Signing up for a credit card or opening a bank account can often mean signing away your right to take the company to court if things go wrong. Many banks and financial companies avoid accountability by putting arbitration clauses in their contracts that block groups of their customers from suing them.”

In addition to giving consumers their day in court, the proposal would serve as a deterrent by incentivizing financial institutions to comply with the law so as to avoid class-action lawsuits, according to the CFPB.

It would also increase transparency by enabling the CFPB to collect any claims and awards that result from arbitration clauses and related correspondence.

The Associated Press reports that opponents of the CFPB’s proposal argue that it would only benefit class-action lawyers.

Richard Hunt, president of the Consumer Banker Association — whose members are mostly large regional and national retail banks — says in the AP report:

“Arbitration has long provided a faster, better, and more cost-effective means of addressing consumer disputes than litigation or class action lawsuits. The real winners of today’s proposal are trial attorneys, not consumers.”

If you’re currently having trouble with a financial institution such as a creditor or even the IRS, or you need help choosing a financial product like a loan or simply a budget, check out the Money Talks News Solutions Center for information and guidance.

What’s your take on this news? Share your thoughts below or in our Forums. It’s the place where you can speak your mind, explore topics in-depth, and post questions and get answers.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: How to Save $1,000 a Year on Car Maintenance

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,788 more deals!