Contracts are important for many reasons, including setting out the agreement of the parties and making clear what services will be provided for a fee. However, contracts can be misused by the party or business drafting the contract when hidden fees or unwanted provisions are buried inside a lengthy document.
Thankfully, the Consumer Financial Protection Bureau (CFPB) has been taking actions to restore more rights to consumers. In July 2017, the CFPB adopted a new rule for banking and financial firms forbidding them from including mandatory arbitration in their contracts. This provides more freedoms to consumers to defend themselves in disputes, including creating and joining class-action lawsuits. If accepted, the rule is expected to go into effect in 2018.
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 hand pick 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.
Mandatory arbitration circumvents your seventh amendment right to a trial by jury.
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.