Bureau proposes ban on arbitration
NEW YORK — Consumers could band together to sue their banks or credit card companies under a federal rule issued Monday that’s likely to face resistance from Congressional Republicans and the White House.
The Consumer Financial Protection Bureau decided to ban most types of mandatory arbitration clauses, which require credit card or bank customers to use a mediator when they have a dispute — often giving up their right to sue in court.
Mandatory arbitration clauses are found in the fine print of tens of millions of financial products, from credit cards to checking accounts.
Banks have strongly opposed banning arbitration causes, arguing that arbitration is a more efficient way of handling small disputes and that class-action lawsuits largely benefit the lawyers handling the cases.