SACRAMENTO — California Attorney General Xavier Becerra today urged the U.S. Senate to support a rule that allows people to pursue justice against financial services companies. The rule — known as the Arbitration Rule — was issued by the Consumer Financial Protection Bureau on July 10, but is already under attack in Congress. Specifically, Senate Republicans have filed a Joint Resolution for Disapproval in order to repeal the Arbitration Rule. In a letter to U.S. Senate leaders, Attorney General Becerra and 19 attorneys general underscored that the Arbitration Rule would provide relief to hardworking Americans who were previously prohibited from joining class action lawsuits or even going to court at all. As opposed to costly individual arbitrations, class action lawsuits are often the only realistic way for consumers to hold these companies
“The Arbitration Rule is one tool that helps protect consumers and hold corporations accountable,” said Attorney General Becerra. “It allows people to seek justice when financial services companies break the law. But some in Congress continue to do the bidding of Wall Street instead of Main Street and want to gut this rule. Senators should stand up for consumers instead of corporate interests.”
In recent years, when opening a bank account or obtaining a credit card, consumers have been forced to agree that they will not bring or join a class action lawsuit. In short, this means that they could only hold these corporations
“While the financial services industry promotes arbitration, the truth is that most of their consumers can’t afford it. When financial services companies require their customers to use individual arbitration to address their complaints or disputes, most consumers simply lack the time and resources to arbitrate a dispute on their own or to hire an attorney to file a claim on their behalf. This is especially true where consumers have been defrauded out of small amounts of money. In the words of Judge Richard Posner of the Seventh Circuit Court of Appeals, ‘only a lunatic or a fanatic sues for $30.’ If consumers cannot join class actions, the result is “not 17 million individual suits, but zero individual suits.’” write the attorneys general in the letter.
A copy of the letter is attached to the electronic version of this release at oag.ca.gov/news.
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