There is good news and potentially bad news for consumers in Missouri and the rest of the United States. Both have to do with consumers’ legal rights against big corporations that have acted badly.
The good news is the Consumer Financial Protection Bureau’s proposed rule prohibiting financial institutions, such as banks and credit card companies, from stopping customers from pursuing sizeable disputes through class action litigation.
Forced Arbitration Hurts Customers
Many financial companies have inserted mandatory arbitration clauses into their customer contracts. These clauses force consumers to settle claims via arbitration and prohibit them from seeking damages collectively in a court of law. This action is known as a class action lawsuit and can be effective and equitable tool for consumers.
Class action litigation allows those who have been similarly hurt by the wrongful actions of a large company to band together in court in one lawsuit. By doing so, it allows individuals who have suffered damages to affordably pursue a legal remedy.
It’s easy to understand why financial corporations want to deny consumers this legal right and force them to pursue claims individually. The cost of individual court cases may be prohibitive to many. In its 2015 study of forced arbitration clauses, the CFPB found that only 60 percent of consumers had attorneys representing them in their arbitration cases.
The public comment period on this proposed rule ended August 22.
On the flip side, Congress is pondering legislation that could severely weaken consumer class action lawsuits.
What is a Class in a Class Action Lawsuit?
In January, the U.S. House of Representatives passed the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2016. It’s a combination of two earlier proposed laws, one that reshapes the rules for class action lawsuits and the other that deals with asbestos lawsuits specifically.
Part of this new law would unfairly tighten how plaintiff classes are defined. If passed, all individuals would have to have suffered the exact same – not similar – injury to take legal action collectively against a negligent corporation.
Forcing individuals to have the exact same injury may hurt consumers in at least two ways. It could reduce the size of classes and therefore their legal leverage, as well as create an unmanageable number of smaller class actions that would clog the courts for years.
The Senate has yet to vote on this anti-consumer law.
If you’ve been seriously hurt physically or financially by the wrongful actions of a corporation, you still have a powerful legal right. Consult with a class action attorney to learn more.
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