CFPB

  • February 15, 2018
    Guest Post

    by Christopher Wright Durocher, Senior Director of Policy Development and Program, ACS 

    Acting director of the Consumer Financial Protection Bureau, Mick Mulvaney (who also serves as director of the Office of Management and Budget), once called the CFPB a “sick, sad” joke that “some of us would like to get rid of. . .” In the three months since he has taken charge of the consumer watchdog agency, Mulvaney has appeared intent on delivering his own punchline to that joke.

  • November 27, 2017
    Guest Post

    by Paul Bland, Executive Director, Public Justice

    It has become common knowledge in Washington that, if you want to bury bad news, the best time to do so is on a Friday afternoon, or over a holiday weekend. So it is especially telling that, when it came time to strike at one of the most effective agencies in the federal government, the Trump Administration chose a two-for and announced its plans for the Consumer Financial Protection Bureau on Friday evening over Thanksgiving weekend. While most of the country was (the White House hoped) distracted by black Friday sales and family gatherings, President Trump announced he had installed Mick Mulvaney – who once referred to the CFPB as a “sad sick joke” – as acting director of the agency. The move is just the latest in a long line of Presidential appointments designed to dismantle government agencies from the inside by placing their fiercest critics in charge of their work. But Trump’s move at the CFPB is probably illegal, politically risky, and could backfire in a big way.

  • October 2, 2017
    Guest Post

    *This piece originally appeared on the EPI blog.

    by Heidi Shierholz, Senior Economist and Director of Policy, Economic Policy Institute

    Many financial institutions use forced arbitration clauses in their contracts to block consumers with disputes from banding together in court, instead requiring consumers to argue their cases separately in private arbitration proceedings. Embattled banking giant, Wells Fargo, made headlines by embracing the practice to avoid offering class-wide relief for its practices related to the fraudulent account scandal and another scandal involving alleged unfair overdraft practices.

    New data helps illuminate why these banks—and Wells Fargo in particular—prefer forced arbitration to class action lawsuits. We already knew that consumers obtain relief regarding their claims in just 9 percent of disputes, while arbitrators grant companies relief in 93 percent of their claims. But not only do companies win the overwhelming majority of claims when consumers are forced into arbitration—they win big.

  • July 14, 2017
    Guest Post

    by Lauren Guth Barnes, partner at Hagens Berman Sobol Shapiro LLP

    It is 775 pages long. I have not read all of it. But I know this: it is a great win for consumers.

    On Monday, July 10, 2017, the Consumer Financial Protection Bureau (CFPB) issued its final rule banning providers of various consumer financial products and services – credit cards and the like – from using arbitration agreements to bar the filing of or participation in a class action. Arbitration is an alternative form of dispute resolution, almost always held in secret, before an individual paid by one or both sides; the parties forego the right to trial by jury and the protections of an independent judicial system, including a neutral judge, the rules of civil procedure and evidence and the transparency of open proceedings. It may work in some settings, between parties of equal bargaining power and when openly agreed to, after a dispute arises. But when buried in the fine print of contracts, often with a clause preventing any kind of group or class action, forced arbitration serves simply to insulate companies from accountability.

    Say your phone company rips you off to the tune of $30. You will likely be angry. You will complain to some friends. You might even spend a little time on the phone, working your way through the company’s customer service and billing bureaucracy. But when you get no relief there, are you going to file a lawsuit over that $30? Or seek arbitration with the company, either by yourself or with the assistance of a lawyer you may have to pay on an hourly basis? The answer, for the vast majority of Americans, is a resounding “no.”

    Companies count on that. They bank on the fact that it is not really worth your time or energy to fight over $30. Or your neighbor’s time. Or the time of the thousands – or maybe millions – of other people they ripped off too. But wow, $30 times thousands or millions of consumers? That is a pretty penny to pocket, all while facing no liability.

  • July 11, 2017
    Guest Post

    *This piece originally appeared on the Economic Policy Institute’s Working Economics Blog.

    by Celine McNicholas, Labor Counsel, Economic Policy Institute

    Yesterday, the Consumer Financial Protection Bureau (CFPB), an independent agency that serves as a watchdog for consumers, issued a rule that would ban companies from using mandatory arbitration clauses to deny Americans their day in court. The rule would restore consumers’ ability to band together in class-action suits. Without the ability to pool resources, many people are forced to abandon claims against financial institutions and other powerful companies. Consider that hundreds of millions of contracts for consumer financial products and services include mandatory arbitration clauses. Yet, The New York Times found that between 2010 and 2014, only 505 consumers went to arbitration over a dispute of $2,500 or less. By prohibiting class actions, companies have dramatically reduced consumer challenges to predatory practices.

    Mandatory arbitration clauses are also used by employers. Employees are forced give up their right to sue in court and accept private arbitration as their only remedy for violations of their legal rights. Private arbitration clauses tilt the system in the business’s favor: the company is often allowed to choose the arbitrator, who will thus be inclined to side with the business; arbitration also cannot be appealed, leaving workers and consumers in much worse shape than if they had access to the courts. As such, employees who bring grievances against their employers are much less likely to win in arbitration than in federal court. Employees in arbitration win only about a fifth of the time (21.4 percent), whereas they win more than a third (36.4 percent) of the time in federal courts.