The basic argument for arbitration is that greedy trial lawyers like to sue businesses and make money. If lawyers aren’t allowed to sue a business for illegal acts in a court of law, then the business will pass along the savings to the consumer and it will save everyone a lot of money. Yeah, right. If businesses weren’t doing illegal things, then lawyers would have no basis to sue them in the first place. Arbitration is a forced agreement used by businesses with their consumer customers to say, in essence, you are going to pay me for something, either a service or product, and if I cause harm to you in any way, you agree you cannot sue me in court.
According to the NCLC (National Consumer Law Center), the CFPB (Consumer Financial Protection Bureau) recently proposed a rule to prohibit contracts that have arbitration requirements unless the contract includes a notice that class actions are not affected and may be brought in court. See § 1040.4(a). The proposal at § 1040.4(b) also requires that providers submit to the CFPB certain information concerning any individual arbitration proceeding in which they are involved.
“When enacted, this rule will be one of the most important consumer developments in decades. It would allow consumers once again to fully utilize class action procedures in court cases involving financial products and services. Additionally, although the proposed rule does not prohibit companies from requiring individual arbitration, it promises some collateral benefits for consumers in that area. Some companies include forced arbitration clauses primarily to prevent consumers from bringing class actions. With that possibility no longer available, some companies may give up arbitration altogether.”
Finally, some good news for consumers in our country!