New Hampshire residents may have heard about a study released by the Consumer Financial Protection Bureau on March 10. The federal agency claims that around 75 percent of all credit card users are unaware that they are bound to arbitration terms prohibiting them from suing the issuer individually or through a class action in the event of a dispute. In addition, many of those who are aware of those terms do not understand their effect.
The director of the CFPB claims that although tens of millions of credit card holders are affected by the arbitration provisions, very few individuals are actually aware of them or understand the full extent of their powers. The director also stated that the CFPB would begin considering the appropriate course of action in reaction to the recent discoveries. He described the arbitrary clauses as being designed to limit consumer relief by restricting cardholders’ ability to participate in class action lawsuits that provide millions in restitution per year.
These types of terms are included under a pre-dispute arbitration clause that nullifies the cardholder’s rights to pursue any type of lawsuit. The credit card industry contends that arbitration lower costs for both the issuers and the consumers. However, the CFPB study reaffirms the longstanding claims of many consumer advocacy groups that arbitration unfairly favors the issuer’s interests over the consumer.
Debtors who need help with these types of financial challenges may want to contact a lawyer who may be able to negotiate a settlement agreement with the creditor. Lawyers may also be effective at safeguarding debtors from wage garnishments and creditor harassment as well. Debtors who have questions about the bankruptcy process may also benefit from the advice of legal counsel.
Source: credit.com, “Consumer Watchdog Says You Should Be Able to Sue Your Credit Card Company”, Bob Sullivan, March 10, 2015