Credit Card News

Advertising Disclosure is an independent, advertising-supported web site. receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Legal » CFPB Looking to Give Consumers More Options

CFPB Looking to Give Consumers More Options

Add to Favorites:

The Consumer Financial Protection Bureau (CFPB) is looking take contract “gotchas” out of everything from credit card contracts to back accounts and payday loan contracts – by removing arbitration clauses so that consumers have more options including the right to sue banks.
The CFPB is proposing prohibiting these mandatory arbitration clauses in contracts because they not only take going to court out of the equation for consumers, but also prohibit them from banding together to recoup damages.
Right now the only recourse they have is to go it alone in arbitration. According to the CFPB, with this new rule companies could no longer sidestep due process. “Signing up for a credit card or opening a bank account can often mean signing away your right to take the company to court if things go wrong,” said CFPB Director Richard Cordray.
“Many banks and financial companies avoid accountability by putting arbitration clauses in their contracts that block groups of their customers from suing them. Our proposal seeks comment on whether to ban this contract gotcha that effectively denies groups of consumers the right to seek justice and relief for wrongdoing,” he added.
If these new regulations are instituted, consumers will have their day in court, be able to bring class action lawsuits, and for those who continue to use arbitration clauses the process will be far more transparent.

Arbitration clauses have become standard
In recent years, standard contracts for everything from credit card to bank accounts include mandatory arbitration clauses, which as you may have guessed affect hundreds of millions of consumers. The clauses usually spell out that the issues between the company and consumers can only be resolved using an arbitrator. The only exception would be cases that go before a judge in a small claims court.
What does this mean for consumers? It can be used to block lawsuits, and make it impossible for them to come together to go before an arbitrator. So in the end no matter how many people are affected by the same issue, they have to resolve their issues one by one.

Dodd-Frank paved the way
When the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed, Congress mandated that CFPB take a close look at the use of mandatory arbitration clauses. They also empowered them to create regulations that protect consumers if need be, and in this case they clearly feel like there is a need.

Add to Favorites:

Related News:

Dick's Sporting Goods Credit Card Coming Soon
Dick's Sporting Goods Credit Card Coming Soon

By Dar Dowling, Posted: May 16, 2016

Dick's Sporting Goods is teaming up with Synchrony Bank to relaunch the sporting goods retailers' Rewards of Sport credit cards offering up to 6% back in rewards and other extras. Continue reading
Home Buyers Looking for the Next Best Thing
Home Buyers Looking for the Next Best Thing

By Dar Dowling, Posted: April 07, 2016

Technology has had a profound impact on home buying trends, according to a new study by Chase, finding that three out of four people aren't planning to put down roots in their homes for the long term. Continue reading
Renovations on Homeowners To-Do List
Renovations on Homeowners To-Do List

By Dar Dowling, Posted: March 06, 2017

This year homeowners are looking to renovate their homes, according to a new survey by LightStream, an internet based lending division of SunTrust Banks, finding that 59% are planning to get their projects underway. Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
You could turn $200 into $400 with Cashback Match™. Get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.
For Excellent, Good Credit
Unlimited 1.5x rewards on every purchase, every day. For every $1 you spend, you earn 1.5x Miles.
For Excellent, Good Credit
No Annual Fee
For Bad Credit