The U.S. Consumer Financial Protection Bureau’s (CFPB) proposed rule to restrict forced arbitration – a tactic banks and lenders use to block consumers from challenging illegal behavior in court – has been met with widespread support. Below are selected highlights of comments from individual consumers, elected officials, advocacy groups and newspaper editorial boards who weighed in during the public comment period, which ended on Aug. 22, 2016.

 More Than 100,000 Consumers Across the Country Support the Rule

Between the proposed rule’s announcement on May 5, and the close of the comment period on Aug. 22, at least 100,000 individual consumers across the country submitted comments or signed petitions urging the CFPB to restrict forced arbitration in consumer finance. On the other side, FreedomWorks – a conservative political group affiliated with the Tea Party – claims it “generated nearly 15,000 responses opposed to the rule.”

Of the 100,000-plus positive comments, 69 percent of consumers voiced general support for the proposed rule, emphasizing that “[b]arring consumers from joining class actions directly opposes the public interest.” Another 31 percent pushed the CFPB to expand the rule’s coverage and “take the extra step to prohibit individual arbitration in the final rule.”comment chart
This overwhelming support for action against forced arbitration echoes a recent national poll, which found that, by a margin of 3 to 1, voters in both parties support restoring consumers’ right to bring class action lawsuits against banks and lenders.
Key Statements of Support

38 U.S. Senators commend CFPB for proposed rule

“Recognizing the urgent need to address these troubling practices, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 to improve accountability, strengthen the financial system and establish the CFPB. Dodd-Frank included several restrictions on the use of forced arbitration, including a mandate for the CFPB to take action on arbitration. Congress specifically directed the CFPB to study the use of forced arbitration in connection with the offering of consumer financial products and services, and authorized it to ‘prohibit or impose conditions or limitations on the use of’ such agreements based on the study results.”

65 members of the U.S. House of Representatives praise the rule

“Consistent with the bureau’s exhaustive study on forced arbitration, which found that forced arbitration restricts consumers’ access to relief in disputes with financial service providers by limiting class actions, the proposed rule is a critical step to protect the public interest by ensuring that consumers receive redress for systemic unlawful conduct… There is overwhelming evidence that class-action waivers in financial products and services agreements undermine the public interest.”

18 state attorneys general want to extend the reach of state enforcement efforts

“Although we believe consumers will be best served by the total prohibition of mandatory, pre-dispute clauses in consumer financial contracts and we encourage the bureau to consider regulations to that effect, the proposed rules provide a substantial benefit to consumers by restoring their fundamental right to join together to be heard in court when common disputes arise in the commercial marketplace. Many of our respective consumer protection laws include private right of action provisions, the purpose of which is to complement and extend the reach of our state enforcement efforts.”

State legislators from 14 states say the rule is “critical to restoring a healthy and vibrant federalism”

“Because of these resource limitations, states rely on the private cause of action to give effect to their consumer protection laws. Arbitration agreements that undermine the effectiveness of the private cause of action undermine the force and effectiveness of state consumer protection law too… States often serve as the ‘laboratories of democracy’ that allow for experimentation with consumer protection regulation. This experimentation is critical to the calibration of a regulatory scheme that allows for easy access to safe and affordable credit. When consumers cannot enforce state consumer protection laws, lawmakers like us cannot measure the efficacy of those laws and cannot observe the effects of those laws as they evolve through litigation. That stifles the healthy development of consumer protection laws nationwide.”

The Military Coalition, representing 5.5 million servicemembers, applauds the rule

“[Class action bans] are particularly abusive when enforced against service members, who may not be in a position to individually challenge a financial institution’s illegal or unfair practices because of limited resources or frequent relocations or deployment… Our nation’s veterans should not be deprived of the constitutional rights and freedoms that they put their lives on the line to protect, including the right to have their claims heard in a trial by a jury when their rights are violated. The catastrophic consequences these clauses pose for our all-voluntary military fighting force’s morale and our national security are vital reasons for the CFPB to act quickly to finalize the regulations.”

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A couple weeks ago, VICE did some incredible and shocking reporting about an attempt by the predatory payday lending industry to sabotage proposed rules designed to finally rein-in industry practices that have ruined lives by trapping far too many Americans into endless cycles of debt. Payday lenders take advantage of consumers by charging astronomical interest rates and fees, requiring people to take out strings of additional loans that stack up into insurmountable piles of debt.

The staggering amount of debt people are in because of payday loans is shocking, but it’s also shocking how hard industry is fighting these commonsense consumer financial protections. At least it’s shocking to those who are not familiar with corporate America’s all too successful tactic of gaming the process that agencies use to produce new regulations that benefit consumers. Industry does that by turning that very same regulatory process against the rules meant to help people. For those of us at Public Citizen who are constantly trying to defend consumer regulations from being blocked or diluted by industry, this is an all too common theme and very much the rule rather than the exception.

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The resort where payday lenders met at.

VICE uncovered insider documents at a predatory lending industry conference showing exactly how the industry planned to attack and undermine the critical new predatory lending regulations that the U.S. Consumer Financial Protection Bureau (CFPB) has proposed to put in place. The conference was organized by the Consumer Financial Services Association of America, the industry’s trade group, and held at the posh Atlantis resort in the Bahamas.

In multiple sessions, participants in the predatory lending industry learned one of the major strategies to defeat the new CFPB rules: turn the very customers the industry fleeces with high interest loans into the public face of the campaign to defeat restriction on those loans. In truly cynical fashion, predatory lenders were encouraged to “get every customer that comes into your store… to write out a handwritten letter and tell the bureau why they use the product, how they use the product, and why this will be a detriment to their financial stability.” In short, the very borrowers that would be protected from the kinds of debt entrapment loans that the CFPB will potentially prohibit would be used as the key voices arguing against those new rules.

Making matters worse, borrowers might not even know that they had signed up for this campaign to sabotage the predatory lending rules. The article describes previous attempts by the industry to trick customers into submitting comments against restrictions on predatory loans at the state level.

Of course, federal agencies do want to hear from the public about proposed rules in order to improve them before they are finalized. Indeed, the public comment period is an important way for the public to meaningfully participate in giving their opinion, as long as it’s done on a good-faith basis.

The problem here is that the predatory lending industry knows there is significant grassroots support for the new CFPB rules—no one wants loan sharks to take advantage of consumers. So they schemed to find a way to counter that with their own “flood” of comments without making it look like they are all coming from industry groups that will benefit from killing the new rules. That’s why they’re exploiting their customers and pushing them into submitting a comment.

As the article notes, making it look like there’s real grassroots opposition to the CFPB rules is a key tactic in a broader overall goal of trying to delay the new rules as much as possible so the predatory lenders can keep their business model going as long as possible.

The big takeaway is that whenever agencies like the CFPB put out new rules to protect the public by holding Big Business accountable, the response of Big Business is to use every opportunity in the regulatory process to delay rules. And as our chart of the regulatory process shows, there are a lot of opportunities — far too many, in fact.

That’s why this summer Public Citizen released a groundbreaking report showing just how long it takes for our government agencies to put in place the most important new rules that protect the public. The results were shocking. At most agencies, it takes almost an entire presidential term, four years in other words, to get out a major new rule. Even worse, the trend is going in the wrong direction, with rules finished this year holding the record for the longest rulemakings over the last twenty years. So if you’re keeping score at home, it looks like the Big Business delay strategy is working pretty well.

The good thing is there’s a way to take action. You can make sure your voice is heard in support of new proposed rules to limit predatory lending  over the fabricated ones that the industry puts forward, by taking action to support a strong rule to protect consumers from payday loans.

Finally, as some Republicans in Congress continue to try to rig the regulatory system with more opportunities for industry delay, keep a lookout for other ways to engage with your elected members to make sure they know you oppose any legislation that harms the ability of agencies to write rules to better protect the public.

In May, the Consumer Financial Protection Bureau (CFPB) announced they wanted feedback on their plan to curb forced arbitration clauses.

binding-contract-948442_640Public Citizen members sent a remarkable 27,890 comments to the CFPB. Once they are added in, our members alone will have tripled the total amount of comments (based on the numbers reported by CFPB’s website around Monday’s closing deadline).

For such a previously under-the-radar issue, this is a huge accomplishment.

Forced arbitration is the latest trick corporations are using to avoid accountability and keep consumer complaints out of public courts. Public Citizen calls them rip-off clauses, because the fine print has crept into contracts everywhere, from Amazon to Chase to Pokémon Go. Consumers are unknowingly signing away their rights to take future complaints to court. Instead, they’re decided by private companies or individuals chosen by the corporation in a kangaroo-court called an arbitration proceeding.

The problem doesn’t end there. Often these rip-off clauses also prevent consumers from joining together in a class action lawsuit. This is critical, because it often doesn’t make sense for consumers to fight companies alone when potential damages are small. Take for example James Pendergast, who was charged $20 by Sprint for “roaming” while he was in his house.  A lawyer told him the case would take six figures to take to trial and there was the possibility he would be on the hook for Sprint’s legal bills. Almost no one would take on such a small dollar case by themselves; which is why class action suits are an important tool for consumers to band together to level the playing field.

We applaud the steps being taken by CFPB Director Richard Cordray and his staff (urged on by our members’ call to action) to ban forced arbitration language from financial services consumer contracts.

Unfortunately, the theme of deregulating Wall Street comes up time and time again and this election cycle has been no exception. That’s a very irresponsible attitude when Americans are still struggling from the impacts of the Great Recession. We need more financial protections, not less.

Image via Flickr user Russ Allison Loar.

Image via Flickr user Russ Allison Loar.

Public Citizen fought alongside Senator Elizabeth Warren and our partners across the country to enact Wall Street reform legislation but it fell short and left out some key changes to rein-in harmful financial practices, like high-speed trading on the stock market. Now is the time to push for change that can stop the reckless activities of Wall Street traders.

That’s why Public Citizen supports the Wall Street Speculation Tax. Originally introduced in the U.S. in 1914, the tax was doubled as a way to speed economic recovery after the Great Depression, Public Citizen wants the United States to rejoin the around 40 countries that currently have some form of taxes on financial transactions like Wall Street trades.

As a member of the Take on Wall Street campaign, Public Citizen continues to call on Congress to make policy changes that will help cut back on some of the worst of Wall Street’s greed and excesses. Reinstating a tax on Wall Street trades is an essential part of the prescription to making the market work for Main Street and average investors. And, with the Wall Street Speculation Tax, the traders responsible for the 2008 crash would begin to repay their debt to society.

What is the Wall Street Speculation Tax?

Also known as a financial transaction tax or Robin Hood tax, the Wall Street Speculation Tax would add a fee to Wall Street trades such as stocks, bonds, and other financial instruments. Legislative proposals vary, but typically the fee would equal a few cents per hundred dollars traded, but would raise tens billions of dollars per year of revenue that could be spent on education and create jobs while reducing dangerous financial market speculation.

Who supports the Wall Street Speculation Tax?

Business leaders and financial industry professionals like Bill Gates, Warren Buffett, former Federal Deposit Insurance Corp. chair Sheila Bair and Vanguard founder John Bogle have all given their support to the Wall Street Speculation Tax. Labor unions like the Communications Workers of America and the AFL­CIO and environmental and faith groups like Friends of the Earth and NETWORK (the “Nuns on the Bus” group) have also added their voices to the growing number of organizations and individuals seeking to curb reckless Wall Street speculation.

What can I do?

Take action at TakeOnWallSt.com to sign a petition to tell Congress to reform our markets, including by passing a Wall Street Speculation Tax. Or, you can like the campaign on Facebook.

We hope that you’ll join with Public Citizen and our partners in this next phase of Wall Street reform!

Post by recently matriculated Public Citizen intern Amanda Bragg. Thanks, Amanda!

By Anisha Sehgal

Both consumers and healthcare payers are struggling with the rising price of drugs. Unless meaningful reforms are enacted, this problem will only get larger and patients will continue to face crippling out-of-pocket costs in order to care for themselves and their loved ones. The Medicare Part B demonstration is an example of such a reform and would begin to repair the dysfunctional way that we pay for prescription drugs. Unfortunately for patients, the pharmaceutical industry has mounted considerable opposition to this reform and it is not alone. Politicians and organizations such as patients’ groups have also voiced their objection. However, the majority of these individuals and groups have received industry funding.

A recent Public Citizen report revealed that of the 147 patients’ groups who have signed letters objecting to the Medicare Part B demonstration at least 110 (75%) received funding from pharmaceutical or medical device corporations. Since patients’ groups are not required to disclose their funding sources there may be even more than the 110 groups identified by the report that received money from pharma.

The letter organized by the Community Oncology Alliance was sent to congressional leadership while the letter organized by the Partnership to Improve Patient Care was sent to the Center for Medicare and Medicaid Services (CMS). Along with the 147 patients’ groups, 241 doctors’ groups and pharmaceutical industry groups — both of which benefit from the maintaining the status quo of the current reimbursement method — signed either of the two letters opposing the reform. The letters’ combination of patients’ groups as well as industry groups, such as local Biotechnology Innovation Organization (BIO) affiliates, demonstrates the close ties patients’ groups have with the pharmaceutical industry.

In 2015, Part B spending reached $22 billion, double the amount it was in 2007. A reform such as this is necessary in order to remedy Medicare Part B’s unsustainable spending trend. The Medicare Part B demonstration, which is supported by numerous consumer interest groups including Public Citizen, aims to remove incentives for doctors to unnecessarily prescribe higher priced medicines when effective and affordable alternatives are available. Currently a physician who administers a drug under Medicare Part B will be reimbursed for the average sales price plus six percent. The demonstration proposes changing the reimbursement to the average sales price plus 2.5 percent and a flat dollar amount.

The pharmaceutical industry is strongly opposed to this reform because a decrease in the prescription of higher-priced drugs means a decrease in the industry’s profits. In fact, the industry has already spent more than $9 million in campaign funding for members of Congress, which is strongly correlated with lawmakers’ stances on the issue, as revealed by another recent Public Citizen report.

The pharmaceutical industry’s troubling pattern of influence raises questions about the independence of this reform’s opponents. Patients’ groups should reconsider their stance on this issue and realize that in this debate pharma is only looking out for itself, not for the deserving patients of this country.

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