Big banks and capitalist markets are wreaking national havoc!
Banks and other financial institutions have been hiding “rip-off clauses” in the fine print of credit card, bank account, student loan, auto loan, payday loan and other financial contracts — denying wronged consumers any measure of justice. These clauses prohibit consumers from taking a company to court — instead forcing disputes into secretive, private arbitration systems where the odds are stacked in favor of the company.
Adding insult to injury, about 93 percent of the time, arbitrators force consumers to pay the company accused of wrongdoing instead of helping wronged consumers. A recent report from the Economic Policy Institute found the average consumer ends up paying more than $7,700 to the bank or lender that ripped them off!
The recent Wells Fargo scandal — in which the bank opened 3.5 million fake accounts — illustrates how forced arbitration can be used to escape accountability and deny wronged consumers their day in court. The victims of this widespread fraud tried to sue Wells Fargo in 2013, but the bank used forced arbitration to kick them out of court and block class-action lawsuits, keeping the massive fraud out of the spotlight and allowing it to continue for years.
In July, it was revealed that more than 800,000 people who took out car loans from Wells Fargo were charged for auto insurance they did not need. This unneeded insurance helped push roughly 274,000 Wells Fargo customers into delinquency and resulted in almost 25,000 wrongful vehicle repossessions. Many military service members on active duty were the among the Wells Fargo customers hurt by this deceptive and coercive behavior — and they were unable to seek justice because of forced arbitration clauses.
Now, big banks are pressuring Congress to take away our democratic rights through the expedited procedures of the Congressional Review Act (CRA), which allows Congress by majority vote in both chambers, with limited debate, no possibility of a filibuster and the president’s signature to override recently issued public protections; and the U.S. House of Representatives recently voted to do just that.
Polling shows that the Consumer Financial Protection Bureau’s arbitration rule to protect consumers has widespread public support, which is why the CRA resolution overturning it must be defeated in the U.S. Senate, when it comes up for a vote sometime before the end of October. If you don’t want to lose this important protection, now is the time to get in touch with both of our senators. The vote in the Senate — if it happens — is going to be close, and we must stymie this trend toward medieval civil devolution.
Alaska’s U.S. Sens. Dan Sullivan and Lisa Murkowski should stand with consumers and reject this attempt to let big banks and other financial institutions rip off Americans with impunity. Big banks and high financiers should be held accountable when they rip off consumers. They don’t need a “get out of jail free” card, so let’s not give them one.
• John S. Sonin resides in Douglas.