As if banks need to make more money off consumers than they already are, and earn even bigger profits than they already enjoy. At least consumers enjoy the option of filing, or joining a class action excessive overdraft fees lawsuit if they feel wronged.
Then again, maybe not…
In an Op/Ed that ran in several mainstream newspapers, including The News-Messenger of Fremont, Ohio (07/29/17) the USA TODAY Editorial Board opined that many banks build language into the fine print of their loan and account contracts that compel clients to agree to arbitration to settle disputes, rather than litigation. By signing the agreement – which a majority of consumers don’t bother to read – the consumer agrees to abide by that stipulation and thus, has little recourse but to arbitrate their complaint, shutting them out of any opportunity to join a class action lawsuit.
Last month, according to the USA TODAY Op/Ed, the Consumer Financial Protection Bureau (CFPB) introduced regulations that would prohibit lenders from shutting their clients out from a potential class action if they so choose to join one. The rule states that consumers will always have the right to choose arbitration over joining a class action lawsuit if they’d rather, but at the end of the day the consumer has the capacity to make that choice, rather than lose the option of joining an class action excessive overdraft fees lawsuit outright.
However, late last month Republican lawmakers on Capital Hill vowed to kill that rule, claiming that arbitration would make for a better, more satisfactory remedy for a consumer than joining a class action lawsuit.
But that doesn’t appear to be the case either, according to a study conducted two years ago by the CFPB. “In about a thousand cases during the two years studied, 78 consumers won $360,000 in relief through arbitration,” the editors of USA TODAY said in comments appearing in The News-Messenger and other newspapers in the land. “Not all financial institutions use forced arbitration clauses. Among those that don’t, 34 million consumers won $1.1 billion in relief over a five-year period studied. Blocking the courthouse door can save financial institutions a fortune.”
Looking at the issue from both sides, pundits note that individual payouts through an excessive overdraft fees lawsuit can be small – averaging $32 per person – while the law firms preparing, and leading the class action lawsuit, “make a bundle. Both true,” says the USA TODAY Editorial Board.
READ MORE CAPITAL ONE EXCESSIVE OVERDRAFT FEES LEGAL NEWS
The take-away message here is that class actions like the Capital One Excessive Overdraft Fees lawsuit that was settled for millions in 2015, have their place. Consumers should continue to have the choice of either joining an excessive overdraft fees lawsuit, or arbitrating with their bank as they see fit. Removing that choice, now mandated by the CFPB but threatened by Republican lawmakers, would limit most consumers to arbitration only.
The CFPB thinks consumers should have that choice, and the USA TODAY Editorial Board agrees. “[The new CFPB Rule] should be allowed to stand.”