Bureau pro­poses ban on ar­bi­tra­tion

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM -

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.

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