The federal Consumer Financial Protection Bureau has proposed a new rule to rein in the use of forced arbitration in financial contracts that also ban class actions. This rule is focused on the practices of global banks, payday lenders and other financial services companies that commit widespread customer abuse. If your business does not fall into these categories, the rule will not negatively impact your business.

The U.S. Chamber of Commerce, which is funded in large part by those very global banks, would like for you to believe otherwise. It has spoken against the rule and may even pursue a lawsuit to halt it, claiming the rule would hurt small businesses like yours and mine.

The Consumer Financial Protection Bureau rule only goes after bad actors, leaving the rest of us to go about our business. Rather than a new or onerous regulation, the rule establishes access to the justice system, allowing wronged consumers to pursue resolution through the courts – a right that forced arbitration precludes and that is often is so difficult that consumers give up. These arbitrations are often conducted in secret and deny victims the right to disclose details to the press or law enforcement.

For ordinary law-abiding businesses, this rule helps level the playing field by taking away larger institutions’ “get out of jail free” cards. For our customers, it means an opportunity to hold wrongdoers accountable before a judge or jury that can view the sum of the misconduct and rule on behalf of all who were harmed.

Those who want enforcement focused on bad actors should be fans of the Consumer Financial Protection Bureau rule. I hope Sens. Susan Collins and Angus King agree.

Sharon Peralta

Springvale


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