May 9, 2016

Blumenthal lauds proposed curb of forced arbitration clauses

A proposal by a federal consumer agency to curb the use of forced arbitration clauses is being praised by U.S. Sen. Richard Blumenthal (D-Conn.).

The Consumer Financial Protection Bureau (CFPB) is proposing rules that would prohibit mandatory arbitration clauses that deny groups of consumers their day in court. The bureau said in a statement many consumer financial products like credit cards and bank accounts have contract "gotchas" that generally prevent consumers from joining together to sue their bank or financial company for wrongdoing.

Through the use and abuse of forced arbitration clauses, large financial institutions have attempted to squash this right, denying millions of Americans the chance to seek justice, Blumenthal said. "These clauses have one purpose and one purpose only: to stop consumers from holding their financial institutions accountable," the senator added.

Recently, Blumenthal introduced the Justice for Telecommunications Consumers Act, which would invalidate mandatory arbitration clauses and boost accountability in the telecommunications industry. Many telecommunications service contracts include mandatory predispute arbitration agreements, which eliminate consumers' ability to file class action lawsuits and hold corporations accountable.

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