The Consumer Financial Protection Bureau issued a new rule Monday that prevents companies from using arbitration clauses to stop consumers from bringing class action lawsuits.
The clauses force people to “go it alone or give up,” said CFPB Director Richard Cordray. “Our new rule will stop companies from sidestepping the courts and ensure that people who are harmed together can take action together,” he said. Many people aren’t aware that their bank account or credit card contracts came with an arbitration clause buried in the fine print.
But they’re pretty common. Credit card issuers representing more than half of all credit card debt, and banks representing 44% of insured deposits use mandatory arbitration clauses, according to a CFPB report issued in 2015.