CFPB

GOP Senate + Pence = Repeal of CFPB Rule that Protected Consumers

Late last night, Senate Republicans voted to repeal consumer’s right to sue financial companies.

As heavy hearted as I am, I’m also not quite ready to write about last night’s repeal of the CFPB arbitration/class action ban.  All morning, I’ve gotten emails/calls about whether this means the end of any Equifax litigation, to which I reply, “No.” Below, however, is a terrific piece that reports on how @SenateGOP gored consumers’ rights from Yahoo.

‘This was the Wells Fargo Immunity Act’: Consumers lose the right to sue companies

Ethan Wolff-Mann  Yahoo Finance October 25, 2017

Vice President Mike Pence broke a 50-50 tie on the Senate floor Tuesday evening to repeal a rule that prevents consumers from suing financial institutions  — banks and credit card companies, for example.

The Consumer Financial Protection Bureau, which was built out of the financial crisis, created the rule after five years of studying forced arbitration clauses, the fine print inserted by companies to insulate them from lawsuits.

“Congress is standing up for everyday consumers and community banks and credit unions, instead of the trial lawyers, who would have benefited the most from the CFPB’s uninformed and ineffective policy,” said the White House in a press release.

For the 145 million consumers who watched Equifax play fast and loose with their financial data, it may be difficult to see how allowing companies to kill class-action lawsuits is a good thing.

“Tonight’s vote is a giant setback for every consumer in this country,” said Richard Cordray, the CFPB director, in a statement. “As a result, companies like Wells Fargo and Equifax remain free to break the law without fear of legal blowback from their customers.”

A popular bill for financial institutions, unpopular for consumers

“The bill was entirely and exclusively supported by the [finance] industry,” said F. Paul Bland, an attorney at Public Justice, a consumer group. “Every group that represents consumers was strongly against the bill.”

Bland listed special interest groups that opposed the bill: armed service member groups, senior citizen groups, civil rights groups. “Lots of polling said both Republicans and Democrats oppose the bill by heavy margins,” said Bland. “This was the Wells Fargo immunity act. It’s essentially a bailout for those companies.”

For Wells Fargo, Equifax, and other companies that behave badly on a major scale, preventing consumers from banding together to seek justice is a major boon that could save these companies from an unknowable amount of damages.

According to Bland, without class-actions, most consumers will not take action. “The argument that individual arbitration is better for consumers is laughable,” he said. “Look at Equifax: 145 million people. Each of them are supposed to separately file an individual arbitration for themselves? How many of them will even be able to find the American Arbitration Association’s website?”

Good lawyers and bad lawyers

The Trump administration said in the statement that the CFPB’s rule would have benefited “trial lawyers” with “frivolous lawsuits.” Putting aside judging whether suing Equifax or Wells Fargo for negligence might be considered “frivolity,” the Trump administration’s statement amounts to a blatant disregard for facts.

In the CFPB’s massive study on arbitrations, the agency examined more than 400 class-action lawsuits. The attorney fees ended up being just 18% of the money recovered on average — a far cry from lawyers-take-all.

Within the Trump administration’s comments about these “trial lawyers,” as the White House calls them, lies a hypocrisy, according to Bland.

“Mike Pence has a view of trial lawyers that basically adds up to: If you’re on the side of the rich and powerful you’re a good lawyer,” Bland said. “If a lawyer is representing an individual person, they’re a ‘trial lawyer’ and a leech on American society.”

Another scandal will happen, and this will bite the Republicans

In the past two years, two large companies have been exposed for bad behavior on a massive scale: Equifax and Wells Fargo.

“Down the road this is going to be a slow-rolling catastrophe for Republicans who voted for this bill,” said Bland. “I don’t think it’s likely the last significant time we’re going to see consumers totally cheated,” referring to Equifax and Wells Fargo

By removing consumers’ rights to class-action lawsuits, companies have less motivation to police their own behavior and play by the rules.

“The next time we discover something like Wells Fargo having a couple million people that they’ve opened phony unauthorized accounts for,” said Bland. “Fifty Senate Republicans and Mike Pence will own 100% of that scandal.”

Original article found at https://finance.yahoo.com/news/wells-fargo-immunity-act-consumers-lose-right-sue-companies-154053444.html

Light at end of tunnel?

Privacy is a basic right that each consumer should value and want to protect.

For the last several months, I have gone mostly dark on this website. Not purposely. But I’ll admit that the absence of posts here was in large part a reaction to two events–one involving my personal life and the other involving our body politic.

All of us should not give up in the face of the breathtaking insolence of leaders beholden to corporations. I refer not only to Congress’ onslaught against consumer privacy and consumer class actions, but also to the daily (sometimes hourly) blitz on individual rights. Admittedly, it’s difficult to keep track as the battles grow more frequent.

In the end, I urge all of you to tune out the immediate noise. Please know that there are attorneys such as myself who are dedicated to the long-term fight for each consumer’s privacy rights. Always remember that our privacy rights are inextricably entwined with my fight to protect the consumer. Yes, each of us love the convenience that Google, Amazon, Apple, and other major corporations offer us. And, some of these corporations are doing a decent job to protect individual privacy rights. But each of us must remain diligent.

Please stay tuned for the following new blog posts:

  1. Think that a data breach won’t hurt you? Thank again. – I will share with you some eye opening stories of a client, whose personal data was compromised as the result of a massive healthcare data breach. To this day, she continues to deal with identity fraud.
  2. Experian rubs salt in the wounds of 143+ million breach victims  – Don’t accept offers for “free credit monitoring,” from Equifax. In addition to giving up your valuable Personal Information, you will also give you your right to sue Equifax. If you think that arbitration sounds fair enough, you are in for a rude awakening.