Credit Card Issuers Shouldn’t Bully Customers Into Arbitration Clauses
by David Lazarus, Los Angeles Times
Credit card companies say you can’t sue them and you can’t join other customers in suing them, and if you don’t like it, tough.
Federal regulators finally have reached the obvious conclusion: That’s not fair.
The Consumer Financial Protection Bureau has released a study showing that so-called arbitration clauses in credit card service contracts frequently prevent consumers from having a grievance adequately addressed.
“These arbitration clauses restrict consumer relief in disputes with financial companies by limiting class actions that provide millions of dollars in redress each year,” said Richard Cordray, director of the watchdog agency.
“Now that our study has been completed, we will consider what next steps are appropriate,” he said.
You don’t have to be Sherlock Holmes to deduce that he’s talking about new rules for the industry.
Arbitration allows businesses and customers to sidestep the court system and have a dispute resolved by an independent arbitrator who listens to what both sides have to say.
The problem, consumer advocates say, is that arbitrated settlements often favor businesses. Denying consumers the right to sue thus prevents people from seeking an alternative — and possibly more advantageous — means of solving a problem.
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