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You almost had the right to join a class-action suit against your bank. Then congressional Republicans stepped in

REUTERS/Jonathan Ernst
CFPB chief Richard Cordray has been a frequent target of congressional Republicans, who argue the director has too much power.

Like many Americans worried about the future of their jobs, Richard Cordray was recently forced to make a personal, public plea to President Donald Trump.

Cordray is not a factory worker or miner, however; he is the head of the Consumer Financial Protection Bureau, the federal consumer watchdog agency.

The CFPB chief was concerned that Trump would strike a landmark CFPB rule — perhaps the first of many such rule overrides — that gave consumers the ability to band together in class-action lawsuits against banks and financial institutions accused of wrongdoing. Previously, so-called “forced arbitration” clauses in contracts for credit cards and bank accounts compelled customers to enter into legal proceedings individually with financial institutions.

To the CFPB and its backers, the rule embodied the essence of the agency’s mission: giving ordinary Americans more tools to protect themselves, and their financial livelihoods, from banks and lenders trying to nickel and dime consumers.

The Republicans in charge of Congress, along with the financial services industry, did not see it that way. They framed the rule as an overreach by unelected bureaucrats and a giveaway to trial lawyers.

In his last-ditch plea to Trump, Cordray appealed to Trump’s self-branding as a champion of working people. “I think you really don’t like to see American families, including veterans and service members, get cheated out of their hard-earned money and be left helpless to fight back,” he wrote.

Trump was not moved: On Nov. 1, he signed the bill overturning the CFPB rule. The termination of the arbitration rule is the clearest example yet of how eager Washington’s new Republican leadership is to limit the CFPB’s authority and undo the policy it has put in place — and advocates of the embattled agency fear this is just the start.

Immunity for banks?

The CFPB’s rule on forced arbitration was one of Republicans’ first targets, and their first successful effort in 2017 to roll back policy — though that victory ultimately did not come easily.

Like other businesses — phone companies, for example — financial institutions relied heavily on forced arbitration clauses to protect themselves from costly class-action lawsuits. They would place language in contracts that forced consumers, if they wanted to open a credit card or savings account, to accept terms that stripped them of the ability to band with others with similar grievances in a class-action suit if they had a problem with the company.

Instead, the contracts mandated that consumers proceed with their disputes through an arbitration process, in which a resolution is reached outside of court between the consumer and the company, facilitated by a third-party entity, or arbitrator.

For disputes in which a lot of money is at stake, arbitration — which requires a consumer hiring lawyers and taking the time to navigate the process — can make sense. The CFPB commissioned a study on arbitration in 2015, and found that in a sample of disputes, consumers were granted over $5,300 on average, a far greater return than the typical class-action suit yields.

However, most disputes that consumers have with banks involve far less money — a $50 or $100 overdraft fee, for example. According to Prentiss Cox, a professor at the University of Minnesota and a member of the CFPB’s Consumer Advisory Board, these kinds of disputes don’t have enough money at stake for individual consumers to justify hiring lawyers to navigate arbitration.

“Say you overcharged half a million people $100,” Cox explains. “You just made $50 million. Who can afford to litigate the issue over $100? Nobody.”

The CFPB study found that just 2 percent of consumers with credit cards would consider hiring an attorney to go to arbitration over a small-dollar dispute with their bank. In the view of the bureau and other like-minded people, this state of affairs has given banks undue protection, and has deprived consumers of options to recover funds — of whatever amount — they may have lost in dealing with them.

“It’s basically immunity from liability for violating the law,” Cox says. Class-action suits, meanwhile, can potentially benefit any consumer wronged by a particular financial practice, even if they do not participate in the litigation themselves.

As early as summer 2016, the CFPB was publicly discussing its plans to prohibit mandatory arbitration clauses, and by July 2017 the rule had been officially rolled out. It explicitly gave consumers the right to band together in class-action suits, specified how companies could use arbitration clauses going forward, and put in place transparency requirements so the public could better understand how arbitration works.

At the time, Democrats hailed the CFPB’s move as a significant victory: Sen. Al Franken called it a “game-changing move [that] will help shift power back to the American consumer and help ensure that you don’t have to sign away your rights when you sign up for a credit card or checking account, take out a private student loan, or borrow from a payday lender.”

Republicans waste no time

The ink had barely dried on the rule before Republicans, and the financial industry lobby, sprang into action against it.

The CFPB, which is headquartered across the street from the White House, has long been a bête noire for Republicans. It is the brainchild of Massachusetts Sen. Elizabeth Warren, a creation of the 2011 Dodd-Frank financial reform legislation and a signature achievement of Barack Obama’s administration.

Since its founding in 2011, the CFPB has taken sometimes aggressive action against financial institutions that have wronged consumers: In September 2016, it fined Wells Fargo $100 million after that bank created unauthorized accounts for customers to meet sales goals; in 2013, it fined Ally Financial $80 million for charging minority customers higher interest rates for auto loans. Currently, the CFPB has more than 1,600 employees and a $600 million annual budget, which is appropriated through a fixed formula set by the Federal Reserve.

Republicans believe the CFPB is the embodiment of regulatory overreach, and they frequently describe it as a powerful bureaucracy that is not accountable to the people. In the past, they have proposed replacing its powerful director with a board, and giving much more control over its funding to congressional appropriators.

In arguing against the arbitration rule, Republicans claimed it would spark unintended consequences that would ultimately hurt consumers more than help them. The U.S. Treasury Department, led by former Goldman Sachs executive Steven Mnuchin, issued a report that claimed the CFPB rule would prompt thousands of new class-action suits against companies, costing them $500 million in legal fees that would be passed on to consumers.

Critics of the rule have also framed it as a windfall for trial lawyers, who are frequent targets for conservatives, arguing it would benefit them more than it would ordinary consumers.

The House of Representatives wasted no time in trying to block the rule, voting in July to kill it by a margin of 231 to 190. Echoing his party’s line, 3rd District Rep. Erik Paulsen called the move “a common-sense fix to a regulation that was created by unelected bureaucrats rather than the usual legislative process. If we want to protect consumers, we should make sure we’ve looking out for their interests rather than those of trial lawyers.”

It was not until late October that the Senate voted to kill the CFPB rule — one that required a tiebreaker from Vice President Mike Pence after two GOP senators joined Democrats in voting to preserve the rule.

Senate Majority Leader Mitch McConnell reportedly wanted to schedule the vote earlier, but may have delayed it due to Capitol Hill hearings about a data breach at credit reporting agency Equifax — a company that made particularly aggressive use of forced arbitration clauses.

What does it mean for the CFPB?

In the wake of Trump officially terminating the CFPB’s rule, congressional Democrats voiced their displeasure, and vowed to keep fighting for the ability of consumers to bring class action lawsuits against banks — even if that effort will be an uphill climb in a Capitol dominated by Republicans.

In a statement to MinnPost, Franken called the overriding of the rule a “bad move,” and means that “holding big corporations accountable borders on the impossible.”

“Corporate America — including Wall Street firms, payday lenders, credit bureaus like Equifax, and big banks like Wells Fargo — has done everything it can to lock Minnesota consumers into contracts that limit their legal rights,” he said. “The CFPB rule would have helped fix this problem, but it was killed when deep-pocketed special interests were able to sway Republicans in Congress.”

First District Rep. Tim Walz, who has advocated for increased oversight of the CFPB in the past, said he “totally disagreed” with the GOP’s move.

“I think at times we need a little more regulatory humility, but I also agree that the game is stacked, in many cases, against the consumer, and having some of these rules in place helps them,” he said.

Democrats are concerned that the GOP’s win on forced arbitration, however narrow, could portend further blows to the CFPB in the Trump era. Walz forecasted that efforts to weaken the agency and its policies won’t be gradual, but rather “pretty dramatic, which is unfortunate.”

Fifth District Rep. Keith Ellison, one of the agency’s most vocal supporters in Congress, said that Republicans’ votes on arbitration should play into the 2018 election and beyond. “The public needs to know,” he said. “There’s an election next year. We should just truth on ‘em, say, 'This is how they voted against you, and if you got ripped off by Wells Fargo, Equifax, any of these big companies, these people are not on your side.' ”

Sixth District GOP Rep. Tom Emmer, a member of the House Financial Services Committee and a vocal CFPB critic, said the larger issue is the constitutionality of the bureau’s structure. “The CFPB is made up by unelected Washington bureaucrats who have no accountability, led by an unelected and equally unaccountable chair, with little transparency or oversight to the American people,” Emmer said.

The D.C. Court of Appeals is expected to soon issue a consequential ruling in a case challenging the CFPB’s constitutionality, which focuses on whether its director has too much power. Emmer said “the CFPB Arbitration Rule and all rulemaking efforts from the CFPB should be halted until these cases are reviewed and the appropriate checks and balances over this bureaucratic entity are installed.”

There is an important new rule from the CFPB that could prompt another round of conflict: In October, the bureau finalized a long-awaited rule cracking down on payday lenders, which frequently target working-class people with short-term, high-interest loans that can leave them saddled with significant debt.

Congressional Republicans could again utilize the Congressional Review Act to block new executive branch rules with legislation, as it did for the arbitration rule.

Beyond that, CFPB advocates are also concerned that Trump will soon have the power to hire a new director for the agency. The president reportedly wants to fire Cordray, but also does not want to make him a martyr, particularly since he is expected to step down before his term is up next summer and possibly make a run for governor of Ohio.

The U of M’s Cox does not expect Trump’s selection to uphold the bureau’s founding mission. “He has filled his Cabinet with Wall Street people,” he said. “If you want to boil it down, it looks like we’re headed to a pre-financial crash regulatory system.”

Despite vowing to fight back, Ellison conceded there is only so much Democrats can do to stop the campaign against the CFPB so long as they remain in the minority.

“Look,” he said, “what I’m saying is, we’re going to lose some of these, man. But we can never be found knuckling under.”

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Comments (36)

Thanks, Sam, for focusing on

Thanks, Sam, for focusing on this horrendous move by the Republicans in Congress and the White House. Along with the new law that prevents anyone from denying a gun permit to those with a mental illness, this is among the really bad and hypocritical things our current government is doing.

And they hope nobody is watching!

All is not lost

While the actions of Congress and Trump are, well, deplorable, we shouldn't lose sight of the fact that arbitration has its benefits. In some ways it is better than class actions for the individual consumer. To recover losses for the consumers that were wronged by financial institutions, arbitration recovers nearly 200 times the dollar amount that class actions do for individuals. That's not exactly deplorable. If we want accountability from financial institutions, we need enforcement, not lawsuits. Enforcement has been lacking long before the Trump Administration.

I don’t see, based on your

I don’t see, based on your data, why “the actions of Congress and Trump are, well, deplorable.” Can you please explain?

but but but ....

isn't that 200 x recovery rate anchored in a reality where consumers widely do not have access to class actions because they signed forced arbitration clauses? Of course they'll recover more from arbitration when they're blocked from collective legal action against a business. Perhaps I missed something here ...

Reading Comprehension

Noted vampire squid Steven Mnuchin can't read (somewhat likely) or he is being willfully deceptive (extremely likely). Page 18 of the CFPB report states that there is 0 statistical evidence that exposure to class liability has any impact on the price or availability of credit to consumers.

Rep. Paulsen seems to think class actions benefit only attorneys while ignoring that arbitration costs benefit the arbitration industry. Class actions return billions of dollars to consumers every year, but more importantly, they help keep corporate America accountable.

Rep. Emmer mostly seems concerned that CFPB has protections against regulatory capture, which is entirely unsurprising.

“Page 18 of the CFPB report

“Page 18 of the CFPB report states that there is 0 statistical evidence that exposure to class liability has any impact on the price or availability of credit to consumers” So the agency makes a determination of its own actions? Interesting.

“Class actions return billions of dollars to consumers every year, but more importantly, they help keep corporate America accountable.” It returns billions of dollars to billions of people who each get $10 – what difference does it make to those people? And keeping corporate America accountable can be achieved by other means – see Wells Fargo example. Plus, people are leaving Wells Fargo which is their real punishment.

Ever watched daytime TV? It's

Ever watched daytime TV? It's wall to wall My Pillow spots and commercials from lawyers cobbling people up to join class actions against pharmaceutical companies, medical device manufacturers and physician groups.

Class action lawsuits have become a multi billion industry for tort lawyers. All a guy, or gal, needs to do is get enough people together to make a claim of harm against a deep pocketed company and boom! their days of $5000 slip and fall fees are over.

At the conclusion of a successful class action, often the *only* party to collect cash is the law team. Victims often get non-monetary recompense; lawyers always get paid.

There are legit instances of abuse, vis. Wells Fargo, but as with many of these things the cure is more toxic than the ailment. Wells Fargo will absolutely recoup that fine from its cuztomers, just as tort claims are passed along in the cost of your meds.

The best medicine for crooked businessmen is personal diligence and word of mouth. Lawyers really don't need another tool for their rent seeking burden on our economy and lives.

Right and Wrong

Mr. Senker is right that the only beneficiary of the rule would have been class action lawyers. 95% of the settlements in those cases leave the lawyers rich and the Plaintiffs with a coupon for a free sandwich. But his notion of what's best medicine is laughable. You take "personal diligence and word of mouth" and I'll put my money on Big Pharma and Wall Street. Let me know how much you want to wager on that one.

I understand your point,

I understand your point, Jackson, and it's not without merit.

But if, even if you're not watching your money close enough to discover it for yourself, you learn that your bank has been signing you up for services without your knowledge, or they're hiding fees (another common trick) and you decide to continue to do business with them, whose fault is that?

PT Barnum knew a thing or two. It doesn't mean the banks shouldn't pay a penalty, but why should the rest of us bear the additional gas for folks that don't watch their own damn money? I keep track of every transaction I make, and I know what fees Ive agreed to...why dont "you"?

The most feared punishment any business can get is loss of customers. Why isn't Wells Fargo on the skids right Now?

There are legal processes in place to punish crooked bankers. Let the regulators regulate, prosecutors bring charges and let judges to order restitution...leave out the greasy middle men.

They Fear The Lawsuit, Not Losing Customers

No, what large financial institutions fear the most is not "loss of customers", it is class action lawsuits that call them to account for serious misdeeds. While you are correct that class actions oftentimes do not provide most members of the class with any substantial compensation, nearly all of those class actions also force the industry to cease the practices and/or adopt remedies to prevent them from repeating that behavior.

Rep. Paulson and many of his like-minded Republicans are bought and paid for by the financial services industry. Killing rules requiring that are helpful in keeping the financial services industry on the straight and narrow is disgraceful. FYI, it is the "unelected bureaucrats" who keep government functioning.

Hi Jim, let's look at your

Hi Jim, let's look at your observation logically.

Class action lawsuits bring financial penalties and bad publicity.

We have volumes of evidence that those financial losses will be passed along to customers. But what if there are no customers to pass them along to?

When the Exxon Valdez dumped oil in Prince William Sound, it cost the company billions. But beyond that, they invested as much in PR campaigns.

So did BP, although they initially mulled ditching the brand altogether; a drastic step in the extreme. https://www.cbsnews.com/news/gas-station-owners-divided-on-nixing-bp-brand/

ValuJet did dump the brand, becoming AirTran.

Companies invest heavily in promoting their brands. When they toss the logo, they are tossing billions. THAT is the testimony to the power of consumers.

For large corporations, the fear of litigation is tempered by the sure knowledge that no judge will allow imposition of any penalty that will put the viability of the company at risk...not gonna happen. It is consumer backlash they fear.

Sandwich Coupons

"95% of the settlements in those cases leave the lawyers rich and the Plaintiffs with a coupon for a free sandwich." First, the coupon for a free sandwich may be all the consumer was entitled to. The point of a class action is to make it economically worthwhile to pursue trivial claims. Stiffing each customer out of $1 may not seem like a big deal, but stiffing a million customers can add up.

Second, the customer in your example is, at least, no worse off than she was before the settlement. She paid nothing to pursue that claim for the coupon. Unlike most other lawsuits, she was put in the same position that she would have been in had she not been cheated (attorneys' fees are paid separately by the defendant as a part of the settlement).

Third, it takes an average of three years to pursue a class action suit. It's not a get rich quick scheme.

I don't know where you get your 95% figure. Most class action suits in federal courts (over 70%) involve securities law violations, not fast-food coupons.

I was a member of a class that got a $600 check because I had been overbilled for insurance premiums. That bought a lot of sandwiches.

"Second, the customer in your

"Second, the customer in your example is, at least, no worse off than she was before the settlement. She paid nothing to pursue that claim for the coupon."

Huh...that looks curiously like a paraphrased daytime TV commercial for the law offices of Studly & Studly; Legal Pitbulls...Fighting for YOU! (Grrrr)

If you got a $600 check, it's a solid bet the legal pitbull (tm) that cobbled the class together got $6000000.

And for $600, why would you not go to small claims court yourself?

Class actions are nothing but a gift for slip and fall gold miners. Period.

Loser pays is an excellent compromise.

Let everyone put some skin in the game and all manner of skeezy lawsuits will disappear. Time to put an end to people using our judicial system as their own personal scratch game, I think.

How Dare They!

I am seldom able to watch daytime TV. On the rare occasions I’m not working, I have better things to do (for instance, your example of a hypothetical law firm may have me re-reading Freud). I’ll have to defer to your familiarity with that particular entertainment genre.

Going after the insurance company in small claims court (or, as it’s correctly called, Conciliation Court) had the major drawback that it could not be done, at least, not by me. A Conciliation Court action has to be brought in the county in which the defendant is located. My insurer was in Massachusetts. I don’t think the cost-benefit analysis is too difficult on that one, do you?

From a broader social standpoint, having an individual pursue a claim accomplishes little. If just a few people bring claims, the defendant has minimal incentive to change its ways. Ten or twelve people? That’s nothing to worry about. Ten or twelve thousand people? Okay, now we have a concern.
The problem with conservative antipathy towards class action suits is that they are an effective mechanism for enforcing laws. Yes, those laws are being broken by wealthy corporations, but they are no less lawbreakers than an illegal immigrant from Central America.

“Class actions are nothing but a gift for slip and fall gold miners. Period.” And outlawing them would be nothing more than an even bigger gift for grifters and frauds. Period (I get the sense that you have no idea of how a class action suit works).

“Loser pays is an excellent compromise.” That’s a good deterrent to consumers and individuals bringing a suit, which probably is the goal (“This little person is suing my corporation?” Egad, sir!”). If the lawsuit is brought in bad faith, Rule 11 of the Federal Rules of Civil Procedure calls for the loser to pay the other side’s costs and attorney’s fees. Look it up during a commercial.

“Let everyone put some skin in the game and all manner of skeezy lawsuits will disappear.” I heard about this obnoxious blowhard in New York who was suing because a news story said he wasn’t as rich as he wanted people to think he was. Let’s start with him.

It seems to me that in your

It seems to me that in your approach you feel that those big banks and corporations are just aliens from other planets and we can do whatever we want and there will be no reaction to our actions. Well, there will be. First, it is quite possible that $600 you (and others) got lead to cancelling Christmas bonuses for that company’s employees (its CEO and President, along with a few others, were spared, of course). And then, I can practically guarantee it, this company found the way to recover all the costs by raising prices and adding more fees. That is how it works.

That is why the answer to your question “Wouldn't it just be easier and more economical for business to follow the law in the first place?” is “no.” So in real life, class action suits do not serve any purpose because they do not give money to the little guy and do not stop big guys from doing it again. As I said, the only real result is that big law firms (and they are usually big) get a lot of money. Why do you want to help these big guys?

Boo Hoo

"First, it is quite possible that $600 you (and others) got lead to cancelling Christmas bonuses for that company’s employees (its CEO and President, along with a few others, were spared, of course)." In that case, I should have overlooked the fact that I was overcharged. I feel so guilty! The premiums were too high for me and my family because I was self-employed, but . . . someone had their Christmas bonus cancelled! I fell awful. Excuse me, I have to step away from the computer to compose myself.

[Later]

"And then, I can practically guarantee it, this company found the way to recover all the costs by raising prices and adding more fees. " Insurance premiums are regulated. That's why the suit happened in the first place.

"That is why the answer to your question 'Wouldn't it just be easier and more economical for business to follow the law in the first place?' is 'no.'” One could say the same thing about laws relating to pollution, corporate bribery, or employment of undocumented aliens. What the heck--business is business!

Raising prices and fees to recoup a legal settlement

This assumes the company does not have competition. Companies can't just raise fees without expecting to lose customers. There should be consequences for bad actions by a company.

“Companies can't just raise

“Companies can't just raise fees without expecting to lose customers. There should be consequences for bad actions by a company.” Then why can they cheat customers without consequences for bad actions? So maybe they actually don’t…Also, raising prices by a fraction of a percent will not affect competiveness… On the other hand, insurance companies in Minnesota raise prices every year…

Example

Lets say communication company "A" chooses to fraudulently add $1.50 to your monthly bill. They have a more or less monopoly/oligopoly on the market, they also have say 40 Mil. customers. Over the course of 1 year they have defrauded the local consumers of ~$720 Mil. Is the expectation that 40 M people will now each have the resources to investigate and discover the fraud, and then go to arbitration to get their $18 back? And with arbitration. already biased towards company "A" do we expect there to be any penalty for "A's" fraud as well as a full pay out? Seems some folks don't like lawyers, well like police, no lawyers means lots of bad guys get away with lots of bad things.
To twist a 2nd Amendment argument about guns: If you take away the lawyers for the good guys only the bad guys will have lawyers!

“Lets say communication

“Lets say communication company "A" chooses to fraudulently add $1.50 to your monthly bill.” OK, so it was fraudulent… So who made a decision: Company’s executives or a low level clerk? Or maybe no one and it was done by mistake? On the other hand, did you try calling them right away as soon as you saw this charge? Did they apologize or insisted it was correct?

And now lawyers got involved… The company must pay $720 million to the customers so you will get your $18 back, maybe even $25 if you consider punitive damage and it will go to customers and the attorneys will get $500 million. Now the company either goes bankrupt so no one (except attorneys, of course- they have the first hand) gets anything and many people lose their jobs or the company pays the money and then finds the way to recoup the costs (otherwise investors will go berserk) through wage reductions, bonus elimination, and, most likely, new fees that you will end up paying and which will amount to much more than $25 you got.

So the question: was it worth it? Who really won?

Sorry

The issue is, about class action law suits, vs. arbitration, it was an example.
You did not address the issue about Legal counsel, Evidently you are fine confusing the issue and stacking corporate lawyers against consumers. Seems you are trying to create facts that don't exist, come to conclusions that don't exist, and litigate a hypothetical example in the comment section. No I can't help you there, as noted its hypothetical, you only get to deal with what was presented.

The last thing we need is unelected

officials running another Federal program that can be used for political purposes. The TEA party groups found that out with the IRS. More power handed over to the Federal Government disguised as “helping the people” . Another boondoggle to grow Govt, no thank you. If you don’t like your bank change it.

Sounds like

Endorsement of: 1 set of laws for the well lawyer-ed and another set of laws for the not so well lawyer-ed. You only get the law you can afford.

The Little Fellers

That's the GOP in a nutshell. Always fighting for the folks Paul David Wellstone referred to as the little Fellers.

No matter how cynical I get, it's almost impossible to keep up.

Let’s look at the logic. “To

Let’s look at the logic.

“To the CFPB and its backers, the rule [allowing suing the banks instead of arbitration] embodied the essence of the agency’s mission: giving ordinary Americans more tools to protect themselves, and their financial livelihoods, from banks and lenders trying to nickel and dime consumers.” Reference to “financial livelihoods” gives me an idea that we are talking about significant amount of money.

But after further reading, I learn that “For disputes in which a lot of money is at stake, arbitration can make sense. The CFPB commissioned a study on arbitration in 2015, and found that in a sample of disputes, consumers were granted over $5,300 on average, a far greater return than the typical class-action suit yields.”

So what is it about then? It explains that, too: “most disputes that consumers have with banks involve far less money — a $50 or $100 overdraft fee.” But those amounts are clearly not ““financial livelihoods” so even if class actions suits are filed, people will gain little which makes this rule totally insignificant for most people. And saying that “Class-action suits, meanwhile, can potentially benefit any consumer wronged by a particular financial practice, even if they do not participate in the litigation themselves” is misleading because it is hard to call getting $50 a benefit, especially if the bank will raise all the fees later on to recoup the costs of litigation. So the only people who gain from those lawsuits are attorneys, not the little guy as Democrats want people to believe.

Now, let’s get back to those $50 that bank overcharged. This is where personal responsibility comes into play. If the bank truly overcharged people, then they can come to the bank and ask for that $50 back and I am sure they will get them because in most cased the bank just made an error. And in really bad cases, the government can step in, like with Wells Fargo’s shenanigans, which makes the Rule even less reasonable.

Your last paragraph made me laugh out loud

I'll be kind and say you and I live in different realities. "You can just walk in and your bank will give you the $50 back". Umm...OK...yeah...sure. Most cases involve small amounts of money to individual consumers and would require customers to spend (most likely work) time, in person or on the phone, trying to get the problem resolved. And that typically means multiple calls never speaking with the same person. That's what these businesses count on...wearing you down. The small amounts from a large number isn't devastating to most customers, but it looks awful nice on the bank's ledgers.

I don't think you've had a lot of experience with arbitration. It's classicly known for splitting the pie down the middle. Your $5,300 award figure is meaningless if you don't know the actual damages suffered by Plaintiffs. Class Actions can be an effective tool, it just needs some modifications.

I am glad I gave you a few

I am glad I gave you a few good minutes to laugh… Yes, it will take a few calls and maybe a visit. If it’s not worth $50, that’s OK, too.

“The small amounts from a large number isn't devastating to most customers, but it looks awful nice on the bank's ledgers.” Sure, and then the Feds come, like after Wells Fargo… I would prefer the government attorneys to do it (they are already on our payroll)…

“I don't think you've had a lot of experience with arbitration. It's classicly known for splitting the pie down the middle.” I don’t but Is it possible that “splitting it down the middle” is a fair thing to do?

So that is about my last paragraph. What about the rest of them?

A Fair Thing to Do

"Is it possible that “splitting it down the middle” is a fair thing to do?" Let's say an accountant embezzles $1 million from his employer, and is caught after doing so. Let's say that he then says, "Tell you what--let's just split it down the middle. I'll keep 500K, and give you back the other half."

Sorry, I can't envision a scenario in which anyone would think that would be a fair thing to do (except, perhaps, the embezzler).

Let’s say that accountant did

Let’s say that accountant did it unintentionally, due to a mistake in company provided software, and that money never went to him but were lost to the market. Then what? You always assume intentional desire to hurt people which is not a given by any means…

Oops.

"Let’s say that accountant did it unintentionally, due to a mistake in company provided software, and that money never went to him but were lost to the market." In that case, it isn't embezzlement. If all the money is lost, there is nothing to split between the accountant and his employer.

The customers, however, may have a complaint. What was this software glitch? Where did it come from?

"You always assume intentional desire to hurt people which is not a given by any means…" A person who is at fault for another's injury bears the responsibility of recompense to the injured. The fault may be intention to harm, or some kind of malevolence. It may also be negligence or carelessness.

"Class Actions can be an

"Class Actions can be an effective tool, it just needs some modifications."

Agreed. Loser pays everything.

Loser Pays?

Even if, as is the standard, the corporation chooses the arbitrator? Most arbitrators want to continue to work, and they know who will be choosing the arbitrator for the next case.

Shoot the messenger, ignore the message

Tom Emmer's railing against the bureaucracy rather than making it a priority to address the much more serious issue of consumers being abused by financial institutions sounds like a certain someone else in D.C.

You almost had the right to join a class-action suit...

But you always have the choice to bank somewhere else.

Sure...

but what does that have to do with an ex-customer and their ability to recover damages due to malfeasance?

It has to do with

Nobody is forced to agree to arbitration which I thought was one of the main points of the story, the arbitration clause in many agreements.