Archive for the ‘Consumer Protection’ Category

By Nicole Arbabzadeh

There are matters that complement the core ideology of all political parties so well that lawmakers across the political spectrum should be working hand-in-hand to achieve the policies. The Arbitration Fairness Act and the Court Legal Access and Student Support (CLASS) Act, which would restore public’s rights to hold wrongdoing corporations accountable in court, are examples of exactly the kind of legislation that should transcend the partisan divide. And yet, partisanship has been a continuous roadblock to their implementation.

So let’s start by reviewing forced arbitration clauses and their devastating consequences for the constituents of all party affiliations. If you’re asking yourself, “What’s forced arbitration?” you’re certainly not alone. According to a recent study conducted by the Consumer Financial Protection Bureau (CFPB), three-quarters of respondents who understood the meaning of forced arbitration did not know whether their credit card contract contained a forced arbitration clause and a mere 7 percent of respondents whose credit card agreements did contain forced arbitration clauses correctly understood that they could not sue in court. These are startling findings considering that the CFPB’s study also found that the vast majority of prepaid card companies, private student loan lenders, and cell phone providers, and the list goes on, include a forced arbitration clause in their terms. These clauses block consumers’ access to public court and force harmed consumers into inherently biased and secretive arbitration proceedings as a condition for obtaining services.

And financial services consumers aren’t the only targeted group – most ordinary Americans are affected by arbitration clauses, as they are often forced upon employees, small businesses, nursing home residents, and college students, to name just a few.

Now, you may be asking, can arbitration clauses really be that bad? Well, forced arbitration:

1. Robs Ordinary Americans of their Hard-Earned Cash

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Note: The live online conversation will begin on Wednesday, July 22, at 3 p.m. Eastern.

At Public Citizen, we fight to keep the courthouse doors open to consumers harmed by Big Business.

But we’re up against a threat to our core democratic values – forced arbitration, a pernicious legal tactic developed by corporations to keep you out of the court and out of their way.

Buried in everyday contracts for products, services and jobs is fine print that says if you are harmed, you can’t go to court – which means you can’t go before an impartial judge or jury. Instead, you must settle your dispute in a private arbitration proceeding or not at all. That’s why we’re working with the Alliance for Justice and other allies to spread the word about forced arbitration and discuss ways to fight back.

Join the online conversation today at 3 p.m. Eastern to see Christine Hines, consumer and civil justice counsel for Public Citizen’s Congress Watch division, discuss this critical issue with other experts.

Watch the live conversation here (the video stream will start at 3 p.m. on July 22):

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Bankers crashed the economy six years ago. Congress approved reform exactly five years ago to deal with the fallout. Yet the Securities and Exchange Commission (SEC) and our other regulatory watchdogs have yet to erect many of the guard rails needed to prevent another calamity.

Title 9 of the Dodd-Frank Wall Street reform Act is focused on reigning in out of control Wall Street executive pay practices — those misplaced incentives that pushed bankers pursuing larger bonuses and rewards to take some of the riskiest gambles in the lead up to the crash. This reform made the SEC (and other agencies) responsible for creating a host of important corporate governance rulemakings — including disclosure requirements, clawbacks, changing the structure of bonus pay completely and correcting the system that incentivizes systemically risky behaviors with dangerous market consequences.

Unfortunately, we have seen stark delays in the bulk of these rulemakings, including some that seem to most to be outrageously simple. Chief among these is the long-delayed executive-compensation rule requiring that companies disclose the pay gap between chief executives and their employees. The agency proposed the rule in 2013 but has yet to complete it.

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By Andrew Gibson

More than a quarter of all Americans are considered financially underserved because they lack access to traditional financial institutions. This is often a result of one’s geographic location or low income. In order to access their finances and make bill payments, these underserved Americans are frequently forced to rely upon alternative financial services like money transfers, check cashing services and payday loans. These businesses frequently prey on the financially underserved by including large fees, high interest rates and forced arbitration clauses with their products.

Companies should not have free rein to exploit low-income Americans by trapping them into a vicious cycle of debt. Accordingly, Public Citizen has signed on to the Campaign for Postal Banking with others like the American Postal Workers Union and Americans for Financial Reform to advocate for expanding the non-banking financial services offered by the U.S. Postal Service.

According to a 2014 report from the U.S. Postal Service Office of Inspector General (OIG), an independent oversight agency within the USPS, more than 68 million adults in the United States rely on services like payday loans, check cashing, and prepaid debit cards to access their earnings and pay bills.

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by Nicole Arbabzadeh

A recent article by David Lazarus in the Los Angeles Times delivers a harrowing glimpse into the Fairness in Class Action Litigation Act (H.R. 1927) and its potentially devastating ramifications to the justice system should it pass in Congress. If class action lawsuits are already becoming endangered due to the systematic use of forced arbitration, H.R. 1927 would ultimately guarantee total extinction.

The disingenuously titled bill, endorsed by the U.S. Chamber of Commerce and sponsored by U.S. Reps. Bob Goodlatte (R-Va.) and Trent Franks (R-Ariz.), would effectively eradicate class action lawsuits due to its sweeping measures and preposterous restrictions. Franks has unabashedly lauded the measure as a means to “allow those with serious injuries to have their own day in court.”

The truth is radically different.

In reality, the bill prohibits individuals with serious injuries or lesser grievances from accessing the legal system at all. Under the current system, class actions may be brought if class members experience similar injuries or complaints. If this bill passes those types of class actions will move forward only if “each proposed class member suffered an injury of the same type and scope as the injury of the named class representative or representatives” (emphasis added) – a nearly impossible standard to meet — hence the extinction.

Under the “same type and scope” stipulation, the following claims would be precluded from joining a class action suit:

• Any claim that is off by even a margin of $1 (all claims, for example, in a securities fraud case, would have to exactly match that of the class representative).

• Any claim that does not involve the same injury to the same body part (all physical injuries, for example, in a cars’ faulty brakes case, would have to pertain to a broken leg, not a broken arm or other ailment pertaining to the leg).

With such arbitrary and absurd demands, even the most historically important class action lawsuits would have been prohibited from proceeding.

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