LDF Welcomes New CFPB Rule to Protect Consumers from Predatory Financial Products
Today, the Consumer Financial Protection Bureau (CFPB) finalized a new rule that will empower consumers to challenge fraudulent and predatory financial products in court. The proposed rule would restrict the financial industry’s use of forced arbitration to dismantle class action lawsuits, a practice that effectively prevents consumers from holding financial institutions to account for illegal behavior. The decision is based on CFPB’s exhaustive three-year empirical study, which found that class action bans in arbitration clauses are ubiquitous and serve to protect corporate wrongdoers engaged in predatory and sometimes discriminatory lending practices.
In August of 2016, the NAACP Legal Defense and Educational Fund, Inc. submitted comments in support of this rule, and in February, we joined a coalition of hundreds of consumer, civil rights, labor, and community groups that urged the CFPB to adopt these important guidelines. LDF Policy Director Todd Cox issued the following statement:
“This rule will protect countless Americans from exploitation, fraud, and abuse, including Americans of color who continue to face systemic discrimination as they seek to receive credit, secure fair loans, and purchase any number of other financial products that can be critical to a person’s financial well-being. By leveling the playing field between corporations and individuals, this rule is an important step towards addressing the economic inequality that is so closely intertwined with racial injustice in the United States.”
Founded in 1940, the NAACP Legal Defense and Educational Fund, Inc. (LDF) is the nation’s first civil and human rights law organization and has been completely separate from the National Association for the Advancement of Colored People (NAACP) since 1957—although LDF was originally founded by the NAACP and shares its commitment to equal rights. LDF’s Thurgood Marshall Institute is a multi-disciplinary and collaborative hub within LDF that launches targeted campaigns and undertakes innovative research to shape the civil rights narrative. In media attributions, please refer to us as the NAACP Legal Defense Fund or LDF.