The Senate last Wednesday yanked away one of the few remaining tools that consumers can use when banks and other financial corporations abuse their authority and unlawfully victimize customers. Despite a growing list of such abuses, the Senate voted 51-50 to prohibit consumers from joining in class-action lawsuits against those institutions.
Vice President Mike Pence cast the deciding vote, which now awaits President Donald Trump’s signature. Republican maverick-wannabes — Sens. John McCain, Jeff Flake of Arizona and Bob Corker of Tennessee — disappointingly joined the pack on this one. Rep. Ann Wagner, R-Mo., previously led the fight for passage on the House side.
The effect of their prohibition is to force customers — folks like you — to deal individually with very wealthy and lawyer-laden financial corporations when disputes arise. You cannot band together with other aggrieved parties and go to court, even if there’s a demonstrated pattern of abuse by the corporations affecting millions of customers.
The Consumer Financial Protection Bureau, established after the 2007-2008 financial crisis to impose greater scrutiny on the banking industry, had determined that mandatory arbitration clauses gave big financial corporations an unfair advantage over consumers. Such clauses typically are contained in the fine print of credit card or bank account agreements.
The CFPB in July declared that banks could not restrict customers from banding together in class-action lawsuits. It was a victory for the little guy.
Because of the Senate vote, big financial corporations will be able to behave with impunity. The worst that’ll happen to them is a few individual customers will get disputes arbitrated behind closed doors for a relatively small payout.
Consider a few of the recent scandals, such as Wells Fargo secretly opening credit accounts in customers’ names without their permission, then billing them for the service. Or Wells Fargo billing car-loan customers for insurance they didn’t need or want. Or Equifax, the corporation that accesses your entire financial background to tell lenders whether you’re credit-worthy, allowing a data breach that exposed roughly half of Americans’ Social Security numbers and other vital information.
Whatever harm consumers suffer in future cases will have to be hashed out in an arbitration session instead of a court of law. The results of such sessions are sealed, so there’s no way to know how the little guy fares against corporations and their hordes of lawyers.
But rest assured, it’s an unfair fight from the start, and that’s by design.
Trump organized his presidential campaign to appeal to the Regular Joes and Janes out there who feel no one in Washington is fighting for their interests. But when he signs this bill, it’s the Joes and Janes who will suffer. The Republicans have declared with this vote exactly who they’re fighting for: Wall Street fat cats.
St. Louis Post-Dispatch