Published July 25, 2017 23:05
San Francisco, CA, July 25, 2017— Earlier today, all 14 of California’s House Republicans voted to allow companies to continue sneaking the “ripoff clause” into their contracts with customers. In a nearly party line vote, House Republicans voted for H.J. Res. 111, a resolution to repeal the new Consumer Financial Protection Bureau (CFPB) rule to restore consumers’ ability to join together and hold banks and lenders accountable in class action lawsuits when they break the law.
Paulina Gonzalez, executive director of the California Reinvestment Coalition released this statement:
“It’s disappointing to see some of California’s representatives voted on the side of big companies using fine print to force people into arbitration. For far too long, companies have used forced arbitration to escape accountability for illegal practices against their customers. The new Consumer Financial Protection Bureau rule would have stopped this practice from continuing. Unfortunately, with this House vote today, corporations like Wells Fargo are now one step closer to being able to keep these ripoff clauses that prevent accountability for corporate misbehavior.”
On July 10, the CFPB issued a new rule to restrict banks and lenders’ use of forced arbitration -- fine-print clauses in contracts for credit cards, bank accounts, and other financial products that prevent people from banding together to challenge fraud by big banks.
The CFPB conducted a three-year study that concluded only 9 percent of consumers who do seek arbitration win any relief, recovering an average of just 12 cents on the dollar. In comparison, companies win 93 percent of their cases and win 98 cents on the dollar.
The Congressional Review Act allows Congress to repeal a regulation if both chambers pass a resolution of disapproval and the President signs it. While the House voted to repeal the rule today, the resolution faces an uncertain fate in the Senate.