Congress has voted to abolish a controversial rule proposed by the Consumer Financial Protection Bureau that would have enabled consumers to file class action lawsuits against banks. The vote largely followed party lines. Most Republicans opposed the rule favoring instead to resolve customer disputes through arbitration. This week, a look at how this rule will affect consumers.
Guest: Prentiss Cox, Associate Professor of Law at the University of Minnesota, a member of the inaugural Consumer Advisory Board of the U.S. Consumer Financial Protection Bureau and on the Board of Directors of the State Center for Antitrust and Consumer Protection Enforcement
- Part 1 – 13:12
“Typically, there’s not enough money involved in a consumer transaction for anybody to sue if the company violates the law,” says Cox. “Class-action suits make it affordable and efficient for consumers to band together to prosecute the violations.” The overturn of the CFPB rule allows financial intuitions to place provisions against class-action suits in their contracts.
- Part 2 – 13:23
The Star Tribune reported a Pew Charitable Trust survey that found 89 percent of respondents wanted the right to class-action suits against their banks. In fact, 93 percent of Republicans polled agreed. Why then, is this issue dived along party lines in Congress?