Wall Street Over Main Street? The Death of the Arbitration Rule in Consumer Contracts

November 09, 2017

Before the Wells Fargo fake accounts and Equifax data breach of 2017 but long after the mortgage fraud activity that brought about the 2008 housing recession, the Consumer Financial Protection Bureau (CFPB) proposed a small-but-mighty rule that would ban mandatory arbitration clauses from consumer financial companies’ contracts.  

On October 25, 2017, the Senate killed the CFPB’s arbitration rule by one tie-breaking vote cast by Vice President Mike Pence, in effect, telling consumers that the Trump Administration chooses Wall Street over Main Street. 

For the consumer, this means that those individuals whose credit scores were affected by Wells Fargo opening fake accounts in their names or by the Equifax data breach will have an uphill battle to bring a suit individually and, without an option of multi-district or class-action litigation recourse, most likely any suits will die an early death in the courts. 

Don’t expect the big boys to magically become ethical people with moral compasses pointing to true North without law or regulators reigning them back – rather, start watching the horizon for more shenanigans by big banks and Wall Street against individuals.