The Consumer Financial Protection Bureau (CFPB) could finally unveil a proposed rule on Thursday that would keep companies from including clauses in contracts that make it harder for consumers to sue.
The agency has scheduled a field hearing to discuss so-called forced arbitration in Albuquerque, N.M., on Thursday but would not say more about any announcements. Advocacy groups believe the rule is imminent.
{mosads}At issue are forced arbitration clauses that are slipped into financial contracts and typically bar consumers from joining class action lawsuits. Instead, the clauses force consumers to resolve disputes on alleged abusive practices or unjustified fees, for example, through privately appointed individuals or an arbitrator — often chosen by the company.
At the field hearing Thursday, groups like the American Association for Justice and the Center for Progressive Reform (CPR) expect CFPB to propose the rule it was considering in October.
The rule would ban companies from including clauses that block class action lawsuits and require companies that invoke arbitration clauses for individual disputes to submit any arbitration claims and awards to the agency for review.
“This is not a radical proposal. It simply means consumers will be able to hold bad actors in the consumer financial sector accountable,” Deepak Gupta, a principal at the law firm Gupta Wessler PLLC, told reporters Wednesday during a call organized by the American Association for Justice.
In a report released Wednesday, the CPR found forced arbitration clauses in 44 percent of checking account contracts, 53 percent of regular credit card contracts, 86 percent of private student loan contracts and 92 percent of prepaid credit card contracts.
“Using financial services like credit cards and loans should not mean giving up basic legal rights,” Martha McCluskey, a CPR member scholar, said in a statement. “What most Americans don’t realize is that many of these services come with potentially harmful strings attached, which they’re forced to accept in order to pay their bills and finance their education.”