Consumers Can No Longer File Class-Actions Against Banks & Credit Card Companies
- October 28, 2017
- Posted by: Andrew Rombach
- Category: Credit Card News
Pictured above is the Capitol Building.
Earlier this week, the Senate voted to end one of a prominent financial policy from the previous White House Administration. From now on, American consumers will not be able to file class-action lawsuits and sue banks and credit card issuers over disputes according to The Hill.
The vote was close. A narrow 51-50 vote determined the outcome after Vice President Mike Pence cast his tie-breaker. The opposition to the class-action policy used the Congressional Review Act to make the move, allowing Congress to annul new federal rules it disagrees with.
Following the decision, the President has 60 days to sign off a resolution and make the act official. According to internal sources, President Trump might sign the bill soon to put an end to a long-term institutional battle between consumer right protection groups, financial lobbyists, and numerous federal regulators.
The development isn’t entirely unwarranted or out of the blue. The House of Representatives had already passed a resolution revoking the Consumer Financial Protection Bureau (CFPB) regulation earlier this summer; the next step was within the Senate.
The move has been met with much criticism. Consumer lawyers admitted that the rule gave average people more power to protect themselves from malpractices. One example where this could have been applied would have been Well Fargo's setup of millions of unauthorized accounts.
At any rate, critics of the recent Senate move aren’t happy. The head of CFPB Richard Cordray commented that the action meant only one thing - that the doors of the American courts would remain closed for the ordinary people fighting for their fundamental rights.
However, supporters of the recent move by the Senate would argue the government could handle these issues. For instance, the Wells Fargo case required federal action as evidenced by recent events and hearings.
Additionally, banking lobbyists stated such a rule leads to massive class-action lawsuits that are unwarranted. While these cases can be entirely justified for cases of actual malpractice, the idea is there would be many cases put forward with only negative or redundant intentions as opposed to a justified cause.
So, it’s clear that consumers now have limited options when it comes to their disputes with big credit card companies and banks.
From now on, when you want to open a bank account, there would be a new clause in the terms and conditions saying that in case of disputes, you would not be able to join a class-action lawsuit, but would bring any arguments to a closed-door, private arbitration individually.
This is most likely bad news for a consumer that has a minor dispute with a very large corporation. It could be assumed that consumers would have to deal with pesky red tape at the very least, and they would be on your own, footing the bill of legal costs individually.
image copyright © Stephen Melkisethian
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