Although most credit card users are likely unaware of the fact, when they use their cards they tacitly agree to a wide variety of clauses found in their credit card agreements, including agreeing to waive their right to join class action lawsuits and take credit card companies to court.
Now, a consumer advocate group is fighting to overturn this practice.
The Consumer Financial Protection Bureau believes that consumers, who feel that they have been wronged by credit card companies, should retain the legal right to take credit card issuers to court to resolve such grievances.
In particular, the CFPB believes that large numbers of consumers, who feel that have all been wronged in the same way by the same company, should be able to band together in a class action lawsuit.
The ability to sue credit card companies in court as part of a class action case can be especially important for the individual consumer because while suing on an individual basis can be very expensive, class action lawsuits are far more accessible.
Credit card companies contend that arbitration is more efficient and less costly than the court system, and are expected to fight any change to the status quo. The companies may feel that they have something of an advantage in arbitration proceedings as compared to court cases because the card companies often select the arbitrator and the proceedings are usually confidential and final.
Mandatory arbitration clauses have become extremely common after a 2011 Supreme Court decision. But the CFPB proposal would not eliminate the arbitration clause completely from credit card agreements.
Instead, the proposal would allow companies to insert arbitration clauses while requiring that they disclose to consumers that the consumers still retain the right to join class action suits.