We have long been against mandatory arbitration clauses used by banks, nursing homes, and financial institutions because they take away the rights of the consumers. We were encouraged in July 2017 when the Consumer Financial Protection Bureau (CFPB) took actions to forbid banking and financial firms from including mandatory arbitration in their contracts. A win for consumers.
On Tuesday, October 24, the U.S. Senate pushed through a reversal of Consumer Financial Protection Bureau (CFPB) limits on mandatory arbitration in a 51-50 vote. Vice President Mike Pence was called in to cast the tie-breaking vote. That is a big win in their battle against post-crisis regulations.
Below is a description of what mandatory arbitration means and it takes away your seventh amendment right to a trial by jury.
What is Mandatory Arbitration?
Mandatory arbitration requires the parties to use an arbitrator to settle the dispute, giving them no other option. In many cases, large corporations will handpick the arbitrator of their choice, giving little hope that the consumer will successfully defend themselves. Discovery of facts can be limited in an arbitration and arbitration can be more expensive to a consumer than a jury trial.
What is the Consumer Financial Protection Bureau?
The CFPB is a government agency that was founded in 2011 in response to the financial crisis in the late 2000s. They work to ensure that financial institutions are playing by the rules and acting in the best interest of consumers. They accomplish this through the enforcement of existing consumer financial laws and through revisions of these laws as needed.