Outten & Golden: Empowering Employees in the Workplace

Posts Tagged ‘Consumer Financial Protection Bureau’

Congress Just Killed Your Right to a Day in Court

Monday, October 30th, 2017

Last week, 50 Senators joined Vice President Mike Pence to kill one of the most important advances in consumer rights in years.

By casting the tie-breaking vote to kill the Consumer Financial Protection Bureau’s arbitration rule – which allowed consumers to band together to sue banks, financial institutions and credit card companies – Pence showed just how much power Wall Street has amassed on Capitol Hill and on Pennsylvania Avenue. It also unmasked the alarmingly cozy relationship between GOP leaders and the bank executives who defrauded millions of consumers and exposed their most important information to Equifax hackers.

As I told one reporter , “This was the Wells Fargo Immunity Act.”

Public Justice was proud to be a leading voice in the effort to defend the CFPB rule and help consumers fight back against the big banks that defraud their own customers. But make no mistake:  This vote was a big setback for consumer protection, but it did not kill the resolve of those of us who will continue to fight alongside the CFPB in order to give Americans their day in court.

Now that consumers have learned what’s at stake, there’s going to be more pressure from constituents for lawmakers to stop the kinds of behavior we’ve seen from Wells Fargo and Equifax, among others. This vote, though heartbreaking for those of us who believe in protecting the little guy, may well turn out to be a huge catalyst for future change.

With your help, we will keep fighting to keep the courthouse doors open.

This blog was originally published at Public Justice on October 30, 2017. Reprinted with permission. 

About the Author: Paul Bland has been a senior attorney at Public Justice since 1997. As Executive Director, Paul manages and leads Public Justice’s legal and foundation staff, guiding the organization’s litigation docket and other advocacy.

Forced Arbitration Protects Sexual Predators and Corporate Wrongdoing

Tuesday, October 24th, 2017

Fox News.  Sterling Jewelers.  Wells Fargo. 

What do they all have in common?  For years, they successfully kept corporate wrongdoing secret, through forced arbitration.

Buried in the fine print of employment contracts and consumer agreements, forced arbitration clauses prohibit you from going to court to enforce your rights.  Instead, employees who experience harassment and discrimination, or consumers who are the victims of financial fraud or illegal fees, are sent to a private arbitration forum.  Frequently designed, chosen, and paid for by the employer or corporation, in arbitration everything is conducted in secret. People who suffered the same abuses often can’t join together to show how rampant a problem is and confront a powerful adversary—and people are less likely to come forward at all, because they have no idea they aren’t alone.

When Gretchen Carlson sought her day in court over sexual harassment allegations against Roger Ailes, her former boss at Fox News, Mr. Ailes’s lawyers had a quick response: send the case to forced arbitration.  After she filed suit, he also invoked a clause that reportedly required absolute secrecy: “all filings, evidence and testimony connected with arbitration, and all relevant allegations and events leading up to the arbitration, shall be held in strict confidence.” It was only because she resisted that clause through a creative legal theory that her allegations were made public—unleashing a tsunami of claims of sexual harassment by Ailes and others at Fox News.

Hundreds and maybe thousands of former employees of Sterling Jewelers, the multibillion-dollar conglomerate behind Jared the Galleria of Jewelry and Kay Jewelers, known for advertising slogans such as “Every kiss begins with Kay,” were allegedly groped, demeaned, and urged to sexually cater to their bosses to stay employed.  The evidence of apparent rampant sexual assault was kept secret for years from other survivors and the general public through gag orders imposed in forced arbitration.

The same thing happened at American Apparel, where employees and models were forced to arbitrate sexual harassment claims and keep the details secret, and the proceedings were reportedly a sham.

We don’t yet know if Hollywood producer Harvey Weinstein used forced arbitration to suppress allegations of his decades-long campaign of sexually harassing, abusing, and assaulting young assistants, temps, employees and executives at the Weinstein Company and Miramax.  But the clauses may well have played a role, and his nondisclosure agreements and secret one-by-one settlements worked to the same effect.

And forced arbitration clauses do not only hide wrongdoing in sexual harassment cases.  Corporations also use forced arbitration to isolate victims and cover up massive, widespread wrongdoing in the financial sector.

For example, forced arbitration clauses found in legitimate customer accounts let Wells Fargo block lawsuits related to the 3.5 million sham accounts it opened; as a result it kept its massive scandal secret for years, and then lied to Congress about it.  People began trying to sue Wells Fargo in 2013, but cases were pushed out of our public courts into secret arbitrations, and Wells Fargo continued creating fake accounts.

KeyBank, like Wells Fargo, has also used forced arbitration to keep disputes secret and block relief for people charged overdraft fees when their accounts weren’t overdrawn.  A court recently ruled “unconscionable” KeyBank’s provision requiring a customer to “keep confidential any decision of an arbitrator.”  But the court allowed KeyBank to force the plaintiff to arbitrate his case individually, despite the fact that thousands or millions of KeyBank customers were subject to the same abuses. These customers were not permitted to come together to challenge these abuses as a group in court, because of forced arbitration.

By imposing secrecy and isolating victims, forced arbitration shields corporate wrongdoing and leaves it more difficult for those harmed to hold the wrongdoers accountable.  That’s why the Consumer Financial Protection Bureau issued a rule earlier this year prohibiting banks, payday lenders and other financial companies from using forced arbitration to cover up widespread frauds, scams and abuses.  This is a first step in the right direction of restoring Americans’ rights to challenge predatory practices.  But some in Congress have threatened to block this important protection. 

Earlier this year, Congress and President Trump overturned rules that prohibited employers with federal contracts from forcing employees to arbitrate sexual harassment or sexual assault claims, or claims alleging discrimination on the basis of sex, race, or religion.  In so doing, they took power away from women facing sexual harassment and returned it to those trying desperately to keep that harassment under wraps.

We cannot tolerate another blow against Americans seeking to hold the wealthy and powerful accountable.  The CFPB’s rule must be permitted to go forward. 

This blog was originally published at Public Citizen Litigation Group’s Consumer Law & Policy Blog on October 23, 2017. Reprinted with permission. 

About the Author: Emily Martin is General Counsel and Vice President for Workplace Justice at the National Women’s Law Center. She oversees the Center’s advocacy, policy, and education efforts to ensure fair treatment and equal opportunity for women at work and to achieve the workplace standards that allow all women to achieve and succeed, with a particular focus on the obstacles that confront women in low-wage jobs and women of color.

On the CFPB’s Birthday, Stand Against Sharks

Friday, July 21st, 2017

July 21 marks the six-year anniversary of the Consumer Financial Protection Bureau, which was created in the wake of the Wall Street crime wave that led to the financial crisis of 2008.

The CFPB was first conceived by law professor Elizabeth Warren, now Senator Warren from Massachusetts, as an agency that could protect the American people from being mistreated, defrauded, and otherwise ripped off by powerful bankers who ran institutions that engaged in massive criminal behavior and yet never spent a day in jail.

It is a day to celebrate, and a day to fight.

Why Celebrate?

Why celebrate? Because, despite a number of attempts to tie its hands, the CFPB has been enormously successful. It has provided almost $12 billion in relief to 29 million victims of bank malfeasance.

It has provided nearly 50 million borrowers with new protections from dirty mortgage tricks – including surprise fees and mistreatment for those who fall behind in their payments.

The CFPB has rewritten credit card rules, saving customers more than $16 billion in hidden fees. It has helped stay-at-home spouses and Americans serving in the armed forces.

Why fight? Because Republicans – helped at times by some venal Democrats – are doing their best to gut the CFPB and leave consumers defenseless against the predators on Wall Street.

Inside the Shark Tank

Does the word “predator” seem too harsh a word for bankers? William Dudley, then President of the Federal Reserve Bank of New York, said in 2013 that Wall Street’s big banks suffered from “deep-seated cultural and ethical failures” and “the apparent lack of respect for law, regulation and the public trust.”

2015 survey of banker ethics found an extraordinary tolerance for corrupt behavior and “a marked decline in ethics” since the study was first conducted in 2012. More than one-third of bankers earning $500,000 or more per year said they “have witnessed or have first hand knowledge of wrongdoing in the workplace.”

One in four said they would break the law themselves if they could make $10 million or more by doing it.

Wall Street’s offenses include “price fixing, bid rigging, market manipulation, money laundering, document forgery, lying to investors, sanctions-evading, and tax dodging.”

At last count, banks had paid more than $200 billion in fines and settlements to settle fraud charges. Bank of America had paid more than $77 billion.

Checkered Citi and Chase

Citigroup, the megabank created with bipartisan cooperation from Republican Senator Phil Gramm and Clinton Treasury Secretary Robert Rubin (who later became the bank’s chief executive), had paid nearly $20 billion.

JPMorgan Chase CEO Jamie Dimon considers himself a worthy commentator on economic issues. But, under his leadership, his bank paid nearly $30 billion for crimes over a four-year period.

These include, according to an investors report, violations of the Bank Secrecy Act; money laundering for drug cartels; violations of sanction orders against Cuba, Iran, Sudan, and Liberia; violations of the Servicemembers Civil Relief Act; the fraudulent sale of unregistered securities and derivatives; bribery of state officials; and, obstruction of justice, including refusal to release documents in the Bernie Madoff case.

Voters Aren’t Fooled

new poll finds that “More than nine in ten Americans (91%) believe it is important to regulate financial services, including 71% who believe it is very important. Strong bipartisan majorities say financial regulation is very important.” That includes Democrats (81%), independent voters (75%), and Republicans (58%).

They’re right. When Trump budget director Mick Mulvaney boasts that the fiction he calls “MAGAnomics” will lead to economic growth of more than 3 percent per year, he doesn’t explain that we routinely had that level of growth until unregulated bank fraud led to the financial crisis of 2008.

If we let the Republicans deregulate Wall Street again, it will set the stage for another crisis.

Republicans Are a Shark’s Best Friend

These bankers may break the law – and be unpopular with voters – but they’ve still got friends on Capitol Hill. Right now Republicans like Sen. Tom Cotten are working to undermine the CFPB’s new arbitration rule, which is set to take effect in September.

This rule ends banks’ ability to force customers into arbitration, a process that’s skewed in Wall Street’s favor. The CFPB rule would make it possible for customers to once again file class-action suits. Given Wall Street’s deep pockets for attorney’s fees, class-action suits are one of the few tools customers have for defending themselves in court.

House Republicans also passed the so-called “Financial Choice Act” – “Financial Carnage Act” might be a better name – a bill that would gut the CFPB and strip away other consumer protections.

When the Republicans fight the CFPB, they’re standing with the student loan predators at Navient. That’s the loan servicing company the CFPB sued earlier this year for cheating borrowers of their rights. That means they’re standing against the 44 million Americans who owe more than $1.4 trillion in student debt.

When the Republicans fight the CFPB, they’re standing with the bankers who defrauded mortgage holders and fraudulently foreclosed on American families. That means they’re standing against the millions of Americans who currently hold more than $14 trillion in mortgage debt.

When the Republicans fight the CFPB, they’re standing with the payday lenders who have trapped hundreds of thousands of lower-income Americans into a debt trap that can lead to annualized interest rates of 300 percent. That means they’re standing against the estimated 12 million Americans who pay an average of $520 per year in interest on eight $375 loans. These borrowers would be protected by the CFPB’s proposed payday lending rules.

People’s Action is repeating its annual “shark week” tradition, which draws attention to  this year, with anti-payday lender actions timed to coincide with the Discovery Channel’s “shark week” programming.

The CFPB has provided an extraordinary amount of help to millions of Americans in just six years. Now it needs our help.

This blog was originally published at OurFuture.org on July 21, 2017. Reprinted with permission.

About the Author: Richard (RJ) Eskow is a writer and radio journalist who has worked in health insurance and economics, occupational health, risk management, finance, and IT. He is also a former musician.

Get Back Your Right To Take Your Bank To Court

Thursday, July 13th, 2017

Wall Street, the U.S. Chamber of Commerce and right-wing Republicans are ganging up again this week against consumers who want to hold financial institutions that rip them off accountable.

The target this time is a rule issued this week by the Consumer Financial Protection Bureau that is designed to restore the ability bank and credit card customers, as individuals or as a group, to take a financial dispute to court.

“Our new rule will restore the ability of groups of people to file or join group lawsuits. In some cases, not only will companies have to provide relief, they will also have to change their behavior moving forward,” said a statement issued by the agency. “People who would otherwise have to go it alone or give up, will be able to join with others to pursue justice and some remedy for their harm.”

However, unsurprisingly, it took less than a day for the guardians of Wall Street profiteering to attack the rule. They are the same people – like Sen. Tom Cotton, R-Ark., in the Senate and Rep. Jeb Hensarling, R-Texas, in the House – who are working to either get rid of the CFPB entirely or render it toothless.

That’s why People’s Action is launching a petition asking Congress to keep the CFPB arbitration rule and protect the ability of ordinary people to go to court against corporate wrongdoers.

Cotton announced Tuesday that he would be introducing legislation to undo the rule under the execrable Congressional Review Act, the same tool Republicans have been using since President Trump took office to undo a host of Obama-era regulations.

Quoted in The Washington Examiner, “Cotton accused the bureau of “going rogue again” and said that the rule “ignores the consumer benefits of arbitration and treats Arkansans like helpless children, incapable of making business decisions in their own best interests.”

Reuters reported that “the U.S. Chamber of Commerce is contemplating a legal challenge and Trump administration officials are also looking at ways to kill the rule.”

Many customers don’t realize that right now, if they believe their bank or credit card customer has ripped them off or otherwise harmed them, they can’t take the matter to court.

That’s because buried in the fine print of more than 50 percent of the nation’s credit card account agreements and more than 40 percent of the bank account agreements, accoording to a 2015 Consumer Financial Protection Bureau report, there’s language that says if you want to challenge wrong or unfair charges to your account, you are required to go into a binding arbitration process, rather than take the dispute to a court.

The arbitration process is rigged to favor the financial institution. When The New York Times looked at this process in 2015, it found that few customers used the arbitration process, and when they did, consumers lost roughly two-thirds of the time. The process is also explicitly designed to keep consumers with similar complaints from banding together to confront patterns of bad behavior.

Among other things, arbitration clauses shielded Wells Fargo from a class action lawsuit when its employees were creating thousands of bogus consumer accounts in order to meet sales quotas.

It’s only fair: If you steal from a bank, you’ll be brought before a judge. The same should happen if a bank steals from you – and thousands of others. That’s what the CFPB rule says.

The use of the Congressional Review Act is particularly pernicious because ff these Republicans succeed this won’t be a temporary setback. This fundamentally unfair and undemocratic practice that keeps Wall Street from being held legally accountable for its actions would be permanently locked in, because the act not only invalidates the rule but prohibits an agency from writing a similar rule in the future.

Sign this petition so Congress hears you loud and clear: Keep the CFPB arbitration rule and protect our right to challenge corporate wrongdoers in court.

Republican leaders in Congress are hell-bent on neutering the CFPB or eliminating it altogether, precisely because it takes actions like this to even the playing field for consumers going up against the financial giants.

This blog was originally published at OurFuture.org on July 13, 2017. Reprinted with permission.

About the Author: Isaiah Poole is communications director of People’s Action, and has been the editor of OurFuture.org since 2007. Previously he worked for 25 years in mainstream media, most recently at Congressional Quarterly, where he covered congressional leadership and tracked major bills through Congress. Most of his journalism experience has been in Washington as both a reporter and an editor on topics ranging from presidential politics to pop culture. His work has put him at the front lines of ideological battles between progressives and conservatives. He also served as a founding member of the Washington Association of Black Journalists and the National Lesbian and Gay Journalists Association.

The Time Is Now to Stand Up for the CFPB

Tuesday, May 23rd, 2017

Mark Feuer, the Los Angeles City Attorney who helped hold Wells Fargo accountable for creating millions of fake accounts without customers’ knowledge, now warns against efforts by the Trump administration and Congress to dismantle the Consumer Financial Protection Bureau.

“I’m appalled at the spectacle of the House attempting to dismantle or at least severely diminish the CFPB,” Feuer told CNNMoney in a recent interview. He was referring to a bill disingenuously called the CHOICE Act, which would neuter the now-independent CFPB so that it no longer serves as a watchdog against the predatory practices of financial institutions.

People’s Action is asking for signatures on a petition calling on Congress to vote “no” on the CHOICE Act, which in expected to come up for a vote in the coming weeks.

Feuer explained in the interview that the CFPB played a crucial role in investigating reports that Wells Fargo employees were fabricating accounts under pressure to meet sales quotas. Those fake accounts, in turn, showed up in financial reports that helped Wells Fargo boost its stock price and, as the stock price rose, executive earnings.

“It’s true we brought the case in the first place” in response to a 2013 Los Angeles Times exposé, Feuer said, “but our collaboration with the CFPB enabled there to be nationwide relief for Wells customers.”

That included $5 million in refunds to consumers who were assessed fees on the fake accounts and changes in sales practices at the bank. The bank also had to pay $185 million in fines, and did away with the sales quotas that led to the creation of the fake accounts.

You would think that a House of Representatives that is answerable to consumers vulnerable to what Sen. Elizabeth Warren calls the “tricks and traps” big banks, predatory lenders, and debt collectors use to take billions of dollars out of their pockets would consider the CFPB to be a hero.

But that House of Representatives does not exist. The majority of the House is instead answerable to the very tricksters who want free rein to game the system and line their pockets. Republicans love the campaign donations they get from Wall Street bankers, payday lenders, and hedge fund managers. They are literally itching to destroy the CFPB and let Wall Street go wild.

After the big banks crashed the economy in 2008, people took action and won reforms to rein in Wall Street abuses. A big part of that was establishing the CFPB, and structuring it so that it isn’t a punching bag for a Congress and White House drunk on big-bank financial contributions.

The CFPB is the first federal financial watchdog whose entire job is making sure Wall Street can’t get away with the tricks and traps that bleed millions out of our pockets. The Bureau has recovered $12 billion dollars in ill-gotten gains for over 27 million people ripped off by the predatory financial industry.

It is no wonder that gutting the CFPB has been a top priority of the Republican Congress from the beginning. And with all of the scandal now consuming Washington, it would be very easy for Congress to get away with this – unless we “stay woke.”

That’s why we have to get loud about what Congress is doing here.
We’ve derailed Wall Street’s agenda before and, if we stand together, we can stop them again. But that means we need to stop the CHOICE Act dead in its tracks.

Tell Congress: You work for us, not Wall Street. We need our government to do more to rein in payday lenders and Wall Street bankers, not give them a free pass to crash the economy again. Say no to the CHOICE Act. Say yes to an independent CFPB.

This blog originally appeared at OurFuture.org on May 22, 2017. Reprinted with permission.

About the Author: Isaiah J. Poole has been the editor of OurFuture.org since 2007. Previously he worked for 25 years in mainstream media, most recently at Congressional Quarterly, where he covered congressional leadership and tracked major bills through Congress. Most of his journalism experience has been in Washington as both a reporter and an editor on topics ranging from presidential politics to pop culture. His work has put him at the front lines of ideological battles between progressives and conservatives. He also served as a founding member of the Washington Association of Black Journalists and the National Lesbian and Gay Journalists Association.

Your Rights Job Survival The Issues Features Resources About This Blog