After a years long study the Consumer Financial Protection Bureau has started the process to ban mandatory arbitration in certain fields. Arbitration sounds reasonable but, as I noted here, has been set up favor businesses and, as the CFPB notes, prevents class action suits:
A “class action” is a type of group lawsuit in which a few people, standing in for a much larger group, believe that they have been harmed by the same product or practice that violates the law. These group lawsuits allow consumers to band together to seek relief for harms that may be hidden from some consumers or are too small to be practical to sue over in an individual court case or arbitration.
This doesn’t mean that all arbitration will go away, just that both parties will have to agree to it. Let’s look at some of the reaction:
“Forcing consumers to hire expensive lawyers and go to trial rather than use a low-cost dispute resolution system harms the very low and middle income consumers the CFPB should be helping,” said Rep. Jeb Hensarling, R-Texas, who is chairman of the House Financial Services Committee.
Gee, there are at least two falsehoods in that short statement: consumers can still use arbitration, they just aren’t forced to; the current mandatory arbitration system is strongly stacked in the favor of businesses which hurts consumers. Good job Jeb.