Warren asks where bank CEOs stand on customers' ability to join class action suits

Warren asks where bank CEOs stand on customers' ability to join class action suits

Sen. Elizabeth WarrenElizabeth Ann WarrenDemocrats wise to proceed cautiously on immigration Strategist behind Warren's political rise to meet with O'Rourke: report Warren fell for ‘Trump trap’ with DNA test, says progressive MORE (D-Mass.) wants to know where the nation’s biggest banks stand on the Consumer Financial Protection Bureau’s new rule banning companies from stripping consumers of their right to join class action lawsuits.  

Warren sent a letter Thursday to the CEOs of the 16 largest financial firms, including Bank of America and Wells Fargo & Co., asking whether they oppose the rule limiting use of language, know as arbitration clauses, in consumer contracts that force consumers to settle disputes privately with an independent third party.

House Republicans passed a resolution late last month to repeal the controversial rule under the Congressional Review Act. Business and bank lobbying groups reportedly claim the rule limits consumer choices and makes it harder to collect from bad actors. 

“A number of lobbying groups representing big banks and financial firms have condemned the rule, asserting that it will harm consumers. The U.S. Chamber of Commerce, 10 the American Bankers Association, 11 and the Financial Services Roundtable12 have criticized the rule and lobbied Congress to overturn it,” Warren wrote.

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“These organizations represent your bank and your industry, but you — and other CEOs of large banks — have remained silent on the rule. If your lobbyists are taking such strong positions against the rule, is there a reason both you and your bank have been unwilling to take a public position?”

The rule, as Warren noted, does not prevent a customer and a bank from agreeing to enter arbitration after a dispute arises; it prohibits financial firms from forcing customers to give up their right to a class action pre-emptively and makes the individual arbitration process more transparent by forcing companies to report data on claims and outcomes of arbitration. 

Warren asked the bank leaders if they oppose the rule, if they use arbitration agreements in their consumer contracts and for data on the cases they've settled through arbitration.