On Tuesday, October 24th, the U. S. Senate voted to end a rule that prohibited banks from including language in their contracts that prohibited individuals from filing class action claims against banks.
A class-action lawsuit is when a group of people has suffered the same or similar injuries or financial damages from the same source, and they sue the party responsible as a group.
Because the Senate killed this rule, Americans seeking legal action against banks may be forced to settle things in private arbitration. This potentially reduces the options for a favorable settlement. In addition, this makes it easier for banks that use this language in contracts to get away with actions similar to the events that recently took place during the Wells Fargo debacle where the bank created millions of unauthorized accounts or the Equifax debacle where the corporation attempted to stop Americans from filing a class action after a major security breach.
While no members of the Democratic party voted for this, most of the Republicans did. Every Republican except John Kennedy and Lindsey Graham voted in favor of getting rid of the rule. After the vote was tied 50-50, Vice President Mike Pence gave the final vote to kill the rule.
The rule was originally brought to the table last July when the Consumer Financial Protection Bureau proposed it to promote class-action litigation. They wanted Americans to have the ability to have their voices heard when banks commit wrongful actions or act in the interest of corporate greed.
Creators of the rule believe stopping the arbitration process and going to a class-action lawsuit so companies would have to take responsibility for the financial harm they’ve caused to other people. When arbitration is the only option, usually most people don’t bother with the process.
Now that the rule has been killed, the Bureau Director of the CFPB, Richard Cordray, is speaking up about how this is a major setback for the American people. He hopes that President Trump will veto the bill.
A veto is unlikely because Trump recently congratulated Congress for repealing the rule.
The rule still garners a lot of contention from both sides of the aisle. Democrats mainly believe that this rule gives too much power to big banks and other industry giants and that it prevents people from their right to seek legal action.
However, Republicans say that this rule would do more harm than good. The Treasury Department issued a report that concluded this rule would cost businesses a huge amount of money that would have gone to consumers.
Democrats remain skeptical and believe the report doesn’t have a neutral approach to the rule. They believe this report takes the side of the industries this rule would affect.
Although the Senate repealed the rule, this is only one aspect of the bigger conversation of what truly benefits your best interests.
If you have any questions about class-action lawsuits in Kentucky, contact Thomas Law Offices today at (877) 955-7001.