Should it Be Easier to Sue Your Credit Card Company? The House Just Said No
Congress has taken the first step to block the Consumer Financial Protection Bureau’s new rule that would give consumers the right to sue their banks or credit card companies and prevent them from getting trapped in complex arbitration with their banks.
On Tuesday, the House of Representatives voted 231-190 to repeal the rule via the Congressional Review Act, according to The Hill. The Congressional Review Act allows lawmakers a final say on new federal regulations. If Congress doesn’t like a new rule from a federal agency when it gets published in the Federal Register, members have 60 legislative days (days when Congress is actually in session) to roll it back by a majority vote.
The vote to repeal came just six days after the CFPB rule was published in the Federal Register.
What’s the Arbitration Rule?
The new CFPB rule wouldn’t prohibit arbitration clauses by banks, so long as those clauses still allowed customers to join class-action lawsuits.
The CFPB has emphasized that arbitration can be prohibitively expensive for customers who have been wronged, while the small-claims process can be too cumbersome to be worth the pursuit.
Allowing consumers to join class-action lawsuits gives them the ability to seek compensation when their accounts have been mishandled.
The Congressional Review Act was established in 1996, but until 2017 had only been successfully used one time. The repeal vote now goes to the Senate.
Lisa Rowan is a writer and producer at The Penny Hoarder.