Bryce Covert - Slate
Renae Merle and Tory Newmyer - Washington Post
Jessica Silver-Greenberg - New York Times
Lisa Rickard and David Hirschmann - RealClearMarkets
Norbert Michel - Fortune
Just a little background first. Banks have been increasing their use of clauses that deny its customers the ability to join class-action lawsuits should they have complaints, instead forcing them into arbitration. This was done by adding an arbitration-only clause into that 50,000 page agreement you sign when you open an account. The Consumer Finance Protection Bureau, ostensibly charged with protecting US consumers from bad bank policies/behavior issued a rule to prevent banks et al. from any such restriction. Republicans last night undid that rule allowing banks to preclude class action lawsuits.
After reading many of these articles, I really can't say for sure whether class action lawsuits are better or worse than arbitration for consumers who have been (what's a nice word for) cheated by banks. The main arguments for arbitration seem to be that their faster and they have a higher payout per person (though it's hard to know what exactly that means when it's possible that fewer people try for arbitration). Also, any payout will go directly to the consumer and not go into the pockets of the lawyers. The main arguments for class action are that you're more likely to have an advocate (class-action lawyer) who will work to ensure a payout and conviction, they're more public, and they're more accessible. In addition, it's rarely consumer-friendly when companies are restricting your options to complain about them, so anyone should be immediately dubious of this policy.
All that being said, I think the CFPB's main duty here is to inform consumers. That's one of the most useful things government can do. In this case, it could inform consumers of their rights within arbitration, whether they can bring a lawyer, how consumers could initiate a complaint and go through the process, what are some issues that consumers should be aware of, what cases other people have brought and what their outcome was. There are many, many things that can help consumers.
My main point, however, is that those three paragraphs I wrote are not in any of the news articles on this topic. The first paragraph was basically in each, the second paragraph's separate arguments might be in one or the other depending on the source, and the third paragraph is unheard of.
I'd encourage each reader of this entry to read the Slate article and think about every sentence/paragraph and whether it's talking about whether the rule itself is pro- consumer or anti-. Some examples:
First paragraph: "Under cover of darkness, the Senate voted Tuesday night, with a tie-breaker from Vice President Mike Pence, to undo a rule that had been a major win for consumers against banks."
Scary. "Under cover of darkness...". An assertion that the rule was pro-consumer, let's read more!
"Instead, consumers are pushed into a private arbitration process when they have a complaint, where the odds are steeply stacked against them."
More scaremongering: "pushed", "steeply stacked against them".
Historical context: "Forced arbitration wasn’t always legal: It was barred until 1925, when Congress passed a law allowing companies to use the clauses in disputes between themselves."
See, the people before 1925 knew what was good.
"But most people, understandably, don’t even realize that they’ve signed them. Who takes the time to fully read a product agreement, let alone understand the legalese that means they’re giving away the right to join a class-action lawsuit? The CFPB found that these clauses alone run about 1,100 words on average, with some as long-winded as 2,500 words, and that they are typically the most complexly written part of a contract."
People are being tricked. Banks are trying to get away with this. Then the "why are these so long and complicated complaint."
"Consumers stand little chance of getting relief when they’re pushed into arbitration: Companies have a lot of control over who will oversee and arbitrate the cases. Only about 60 percent of consumers go into arbitration with a lawyer at their side, but companies are always represented. And once an arbitration decision is made, there’s usually no recourse to change it. In one case study, debit cardholders who were able to join a class-action lawsuit got $1 billion via 18 settlements over their allegations of illegal overdraft fees. Those who went through arbitration because they either weren’t allowed to join, or opted out, got nothing at all."
Aha. Finally, the money paragraph. Notice that the lawyer point isn't necessarily good or bad as it doesn't deal directly with whether consumers benefited or lost out eventually. (As an aside, we should remember that the left is not aghast that school's deny lawyers to men accused of sexual assault on campus.) Then, the author cites a single instance where class action resulted in a better outcome for consumers.
After that, the author talks about recent issues at Wells Fargo and Equifax and how they relate to these arbitration clauses without discussing whether that resulted in lower payments for consumers or the lack of paid damages. Then about how Republicans like the financial industry.
So to sum up, in over 900 words on how the Republicans' change will harm consumers, there's a single, concrete claim with evidence related to actual damages, and that was an anecdote. On the other side, there was no mention about the benefits of arbitration, OR, importantly, the vital question of whether the arbitration process tends to result in more losses for consumers or what lawyers' cut is.
Is balanced news really that difficult?
