If you’ve listened to any of the presidential debates, you have heard them talk about “Dodd-Frank,” the Wall Street Reform and Consumer Protection Act. In response to the recession suffered in the 2007-2008 financial crisis years, the U.S. Congress passed the act in 2010.
One of the things Dodd-Frank did was to create the Consumer Financial Protection Bureau. This bureau is an independent government agency tasked with making sure the banks and financial service providers – from payday loan cheats to we-finance-anyone tricksters – operate fairly.
Since it began in 2011, this bureau known as the CFPB claims it has helped return $4 billion to American consumers as a result of its enforcement actions.
It’s set up to be more than a complaint bureau. Under the Dodd-Frank Act, the CFPB can take action against institutions or individuals engaged in unfair, deceptive or abusive acts or practices that violate federal consumer financial laws. And now the bureau wants even sharper teeth.
In early May, the bureau announced it is proposing a new rule that would prohibit mandatory arbitration clauses that deny consumers the right to sue a broad range of financial services companies for wrongdoing. Banks, certain auto lenders, auto title lenders, payday lenders, money transfer services and more – the ranks of those affected by the proposal is expansive.
You know that tiny type below your signature that says if you sign a financial document like a credit card app, loan app, lease-purchase, etc. – you give up the right to participate in group legal actions along with other aggrieved customers? The fine print that says you must go through “arbitration” if you have a beef? The proposed rule will change that, empowering consumers who have not always fared well in arbitration with Big Finance to join a class action lawsuit.
It’s no surprise that banks and other financial institutions hate this proposed rule and hopeful consumers like small-business truckers will like it.
It would certainly earn the new bureau a star on its track record.
The proposed rule is open to comments for a 90-day period after it gets published in the Federal Register.
Getting your tax dollars to work for you makes a lot of sense, and there are a lot of eyeballs on the true usefulness of this swashbuckling young bureau.