The GOP wants to deny you your day in court

The Denver Post - - OPINION - By Cather­ine Ram­pell

Nor­mally, Repub­li­cans are in fa­vor of giv­ing con­sumers more choices. Nor­mally, Repub­li­cans are all about law and order.

And nor­mally, Repub­li­cans claim to be strong de­fend­ers of the Con­sti­tu­tion.

For some rea­son, though, the idea of giv­ing con­sumers the choice to par­tic­i­pate in a court of law — a right en­shrined in the Sev­enth Amend­ment — leaves some GOP leg­is­la­tors quak­ing in their loafers.

That’s the im­pli­ca­tion of a res­o­lu­tion in­tro­duced in both the Se­nate and House on Thurs­day. While you were busy pon­der­ing Pres­i­dent Trump’s views of Napoleon, mem­bers of Congress were work­ing to keep you from your day in court. Here’s the con­text.

When you get a new bank ac­count, credit card, pay­day loan or auto lease, there’s a lot of fine print. Of­ten, the fine print says that if the com­pany harms you — say, charges you a ques­tion­able hid­den fee, blocks your abil­ity to ac­cess your own money or opens a sham ac­count in your name with­out your knowl­edge — you can’t sue it in court.

In­stead, you have to re­solve the dis­pute out­side the court sys­tem, bound by a de­ci­sion made by a pri­vate in­di­vid­ual rather than a judge or jury. Some­times this pri­vate in­di­vid­ual, called an ar­bi­tra­tor, is se­lected and paid by the very com­pany that you be­lieve ripped you off.

Which does not ex­actly sug­gest that this is a neu­tral party.

An­other con­se­quence of this fine print — called a “forced ar­bi­tra­tion clause” — is that it pre­vents you from bring­ing or join­ing a class-ac­tion suit against the com­pany that harmed you. That’s true no matter how many other peo­ple were vic­tim­ized by the ex­act same com­pany, even if they were vic­tim­ized in the ex­act same way.

Wells Fargo, for ex­am­ple, opened mil­lions of fake ac­counts in the names of un­sus­pect­ing cus­tomers. But be­cause these con­sumers had other ac­counts that in­cluded forced-ar­bi­tra­tion clauses, Wells Fargo re­peat­edly tried to use this fine print to block class-ac­tion suits over those bo­gus ac­counts.

The Wells Fargo case is per­haps the most no­to­ri­ous re­cent ex­am­ple, but there are lots of oth­ers. Tens of mil­lions of Amer­i­cans are bound by these forced-ar­bi­tra­tion clauses, ac­cord­ing to the Con­sumer Fi­nan­cial Pro­tec­tion Bureau (CFPB). The vast ma­jor­ity don’t re­al­ize they’ve signed away their rights un­til some­thing goes wrong.

Re­mov­ing the abil­ity to join a class-ac­tion suit is a big deal. Join­ing oth­ers who have been harmed is of­ten the only sen­si­ble strat­egy if the harms are small but wide­spread.

As fed­eral Judge Richard Pos­ner once wrote, “The re­al­is­tic al­ter­na­tive to a class ac­tion is not 17 mil­lion in­di­vid­ual suits, but zero in­di­vid­ual suits, as only a lu­natic or a fa­natic sues for $30.”

Once upon a time, Congress rec­og­nized that the pro­lif­er­a­tion of manda­tory-ar­bi­tra­tion clauses was a prob­lem.

As part of the 2010 Dodd-Frank law, Congress gave the newly cre­ated CFPB the au­thor­ity to ban or limit forced ar­bi­tra­tion in con­nec­tion with con­sumer fi­nan­cial prod­ucts or ser­vices, though the law said the agency had to do a study first.

Since then, the CFPB has con­ducted two stud­ies ex­am­in­ing the preva­lence of these clauses, and their ef­fects on con­sumers and the fi­nan­cial sys­tem. Af­ter an ex­tended com­ment pe­riod, the agency is­sued a fi­nal rule this month say­ing such clauses can no longer be used to block class-ac­tion suits.

Con­sumers can still go through ar­bi­tra­tion if they wish. But they also now have the op­tion of band­ing to­gether with other con­sumers if a lot of peo­ple have been hurt sim­i­larly.

In other words, the CFPB gave con­sumers more choices.

Which, again, sounds like some­thing Repub­li­cans should sup­port.

In­stead, on Thurs­day, Sen. Mike Crapo, R-Idaho, and Rep. Jeb Hen­sar­ling, R-Texas, an­nounced leg­is­la­tion to kill the CFPB rule us­ing the Con­gres­sional Re­view

Act, which al­lows Congress to nul­lify ex­ec­u­tive­branch reg­u­la­tions by a sim­ple ma­jor­ity vote, so long as they act within 60 leg­isla­tive days.

The Trump ad­min­is­tra­tion also ap­pears to be de­vel­op­ing a Plan B, should Congress not act in time.

A Trump ap­pointee, the act­ing comp­trol­ler of the cur­rency, has sug­gested he might try to ob­struct the rule through a reg­u­la­tory route, based on the ab­surd ar­gu­ment that the rule could threaten the sta­bil­ity of the fi­nan­cial sys­tem.

Note that the CFPB’s rule only ap­plies to fi­nan­cial prod­ucts and ser­vices, since those are what falls un­der the agency’s ju­ris­dic­tion. The Trump ad­min­is­tra­tion has mean­while also be­gun to re­peal or re-ex­am­ine other Obama-era reg­u­la­tions de­signed to curb forced ar­bi­tra­tion for dis­putes in­volv­ing nurs­ing homes and for-profit schools.

So much for the pres­i­dent’s pledge to look out for the lit­tle guy. Mac Tully, CEO and Pub­lisher; Justin Mock, Se­nior Vice Pres­i­dent of Fi­nance and Chief Fi­nan­cial Of­fi­cer; Bill Reynolds, Se­nior VP, Cir­cu­la­tion and Pro­duc­tion; Judi Pat­ter­son, Vice Pres­i­dent, Hu­man Re­sources; Bob Kin­ney, Vice Pres­i­dent, In­for­ma­tion Tech­nol­ogy

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