Wednesday 11/29 - Ira Rheingold - Former Director, National Association of Consumer Advocates - Trump gives big banks arbitration, gives consumers a big setback.

Wednesday 11/29
Ira Rheingold
Former Director, National Association of Consumer Advocates
Trump gives big banks arbitration, gives consumers a big setback.

In his ballad of the Depression Era outlaw Pretty Boy Floyd, Woody Guthrie sings… “as through this world I’ve wandered/I’ve seen lots of funny men;/ Some will rob you with a six-gun,/And some with a fountain pen.”

Back in Woody’s day, maybe 80 years back from ours, both kinds of robbers would have eventually wound up in court.  Not today.  

Today, the gunslingers still wind up in the criminal justice system, being confronted by prosecutors, judges, juries and the threat of prison, while the fountain pen wielding thieves take you to arbitration.

I know.  Nobody uses fountain pens any more, but as Jessica Silver-Greenberg reported in the NY Times, more and more corporate defendants are getting binding arbitration.  “Over the last few years,” she wrote, “it has become increasingly difficult to apply for a credit card, use a cellphone, get cable or Internet service, or shop online without agreeing to private arbitration. The same applies to getting a job, renting a car or placing a relative in a nursing home.

In America, the world of private Arbitration is run, from case filing to case closing by the American Arbitration Association, and according to their own statement of principles, it runs things any old way it wants.  All cases, and the AAA does administer almost all arbitration cases in this country, “shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial [or other] Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.”

There’s a lot of legal language in that little less-than-a-paragraph.  The AAA issues “judgment[s]” that can be “entered in any court.”  But based on what?  Not “law.”  Law is the one key legal term missing from the AAA proclamation.  Which is because, as the AAA puts it, its cases are settled “by the American Arbitration Association in accordance with its Commercial [or other] Arbitration Rules.”

In the un-court of arbitration, there’s no law, just arbitration rules.

Your beef with a commercial or financial establishment is going to be decided by “Commercial Arbitration Rules.”  Or not.  Maybe they’ll be decided by “other Arbitration Rules.” Either way, I’ll bet you wish you could make your case for corporate abuse in a regular court of law.

In a recent poll, 95% said they would prefer a court to arbitration.  Oh, and 89% said they want the right to join in class-action lawsuits to take on big corporations like, say, Wells Fargo Bank or Equifax.

Well the 95% and the 89% have been done in by the Trump Administration and Republicans in Congress.  They just combined to roll back a rule about to be enforced by the Consumer Financial Protection Board, a rule that would have sharply reduced compulsory arbitration and boosted the right to class-action litigation.  

What does this mean:  here’s the translation from Massachusetts Democratic Senator Elizabeth Warren: the restoration of compulsory arbitration will “make it easier for financial institutions to cheat people.”

Oh people, 95% for courts not arbitration people, 89% for class-action lawsuits people, 70% against Dreamer deportation, and 70% against outright repeal of Obamacare people, I hope you’re keeping score.

 

READING ROOM

Ira Rheingold is Executive Director and General Counsel of the National Association of Consumer Advocates (NACA), an organization dedicated to protecting consumers from unfair and deceptive business practices.

At NACA, Mr. Rheingold has testified before both Houses of Congress on various mortgage lending and consumer finance issues, offered commentary before federal agencies charged with regulating financial service industries and protecting consumers, and helped draft amicus briefs on issues of great concern to consumers before the nation’s highest courts. Before coming to NACA, Mr. Rheingold worked at the Legal Assistance Foundation of Chicago as a supervisory attorney in charge of the Foreclosure Prevention and Senior Housing Projects. His responsibilities included community outreach and education, legal and policy advocacy and the development of impact litigation against predatory mortgage lenders. Mr. Rheingold also worked for three years as a legal services attorney in suburban Washington D.C. At that job, his primary work included welfare advocacy and homelessness prevention. He is a graduate of Georgetown University Law Center.

http://www.pewtrusts.org/en/research-and-analysis/analysis/2017/09/12/arbitration-rule-aims-to-preserve-financial-consumers-access-to-courts

http://www.consumeradvocates.org/media/press-release/us-senate-votes-repeal-arbitration-rule-take-away-americans-legal-rights

http://www.consumeradvocates.org/media/press-release/naca-grateful-cfpb-director-for-his-tremendous-work-for-consumers

http://www.consumeradvocates.org/media/news/naca-news-single-vote-republicans-throw-out-years-work-consumer-protection

http://www.consumeradvocates.org/resources/legislative-issue/naca-senate-committee-small-businesses-need-access-court-too

http://www.consumeradvocates.org/resources/legislative-issue/naca-urges-house-committee-hold-equifax-accountable-for-data-breach

http://www.consumeradvocates.org/resources/legislative-issue/post-equifax-breach-naca-urges-senate-committee-support-strong-consumer

http://www.consumeradvocates.org/media/press-release/credit-unions-band-together-against-equifax-underscoring-importance-cfpb-rule

http://www.slate.com/articles/technology/future_tense/2017/09/victims_of_the_equifax_hack_that_used_the_website_may_not_necessarily_be.html

https://en.wikipedia.org/wiki/American_Arbitration_Association

https://en.wikipedia.org/wiki/Compulsory_arbitration

https://en.wikipedia.org/wiki/Arbitration_clause

https://en.wikipedia.org/wiki/Steven_Mnuchin

https://www.washingtonpost.com/business/economy/in-wake-of-wells-fargo-scandal-whats-to-be-done-about-damaged-credit-scores/2017/08/18/f26d30e6-7c78-11e7-9d08-b79f191668ed_story.html?utm_term=.89bd3746577c

http://money.cnn.com/2017/10/25/pf/consumer-rights-terms-and-contracts-senate-arbitration/index.html

https://www.washingtonpost.com/news/wonk/wp/2017/10/23/treasury-department-sides-with-wall-street-opposes-elimination-of-mandatory-arbitration-clauses/?utm_term=.ee99a5d358a8

https://www.bloomberg.com/news/articles/2017-10-25/consumer-bureau-s-arbitration-rule-overturned-by-vote-in-senate

https://www.cbsnews.com/news/wall-street-wins-big-on-arbitration-and-consumers-are-mad/

https://www.nytimes.com/2015/11/01/business/dealbook/arbitration-everywhere-stacking-the-deck-of-justice.html?_r=0

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