Sen. Susan Collins has long been an independent voice for Maine, acting in the best interests of Mainers, and not narrow special interests, and as I’m watching a very important — but underappreciated — debate in Washington, I trust that will work for us when Sen. Collins faces a decision about whether we will keep our right to our day in court when Wall Street pulls a fast one on consumers. Wall Street is always trying to do that.
Following the financial crisis, Sen. Collins voted for the Dodd-Frank law 2010, which required a study of the impact on consumers of what’s become known as “forced arbitration.” Consumer attorneys like myself know all about this issue, and it’s an ugly one. But we’re happy that the Consumer Financial Protection Bureau has restored the rights of Mainers to band together to take big banks and financial interests to court if they break the law.
We’re even happier that Sen. Collins helped set us on this path.
Simply put, the CFPB’s new rule restores Americans’ right to band together to fight for their rights when up against powerful financial interests like Wells Fargo and Equifax. These companies bury forced arbitration clauses in contracts for credit cards, checking accounts, and auto loans that say you can’t join together with other consumers to take on a mega bank. Instead you have to go it alone in a secret system where the bank chooses the decision-maker.
It should come as no surprise that forced arbitration yields a win for companies 93 percent of the time according to the CFPB. In fact, the Economic Policy Institute found that consumers not only lose in forced arbitration, but end up having to pay the banks $7,725, on average.
The danger now is that lobbyists for the likes of Equifax and Wells Fargo are pushing the U.S. Senate to wipe out the rule.
They are hiding behind smaller banks and credit unions, trying to argue this rule harms those respected institutions. But they rarely use forced arbitration. If you open a checking account or get a credit card from a credit union, or a small community bank, you are far less likely to end up in forced arbitration. You need to be independent-minded to see through Wall Street’s ploy, which is why we need Sen. Collins.
In addition to overwhelming support from Maine voters, the CFPB’s rule has strong support from military organizations, because they know too well how Wall Street uses forced arbitration to deny veterans and people in uniform the right to their day in court.
The stakes are high for other groups too. At least 217 Mainers were victims of the fake accounts scandal at Wells Fargo, where the megabank opened checking accounts for people without their permission. Wells Fargo used forced arbitration to hide its fraud from the public for years, kicking cases out of court that would have blown the whistle on their scandal years sooner.
The recent scandal at Equifax, which ties consumers’ hands by using forced arbitration clauses with most of its products, makes us all aware that this is a problem with daily consequences. The data shows about 536,000 Mainers got hacked at Equifax. That’s 40 percent of Maine’s adult population! Forcing nearly half of Mainers to go it alone, one by one, in individual arbitrations against Equifax isn’t just impractical, it’s offensive.
Consumer groups and servicemembers aren’t alone. Conservatives strongly support the CFPB rule as well. American Future Fund, a free-market activist group, recently found broad support in Maine for the rule, including among Republican voters.
I’m glad Sen. Collins was on our side when Congress got this ball rolling in 2010. When the time comes, she will undoubtedly do what’s in the best interest of Mainers and ensure they get justice — not forced arbitration.
Thomas Cox is a resident of Yarmouth, Maine and is Of Counsel with the National Consumer Law Center.