New government rule could unlock your right to sue in consumer disputes

BUFFALO, N.Y. (WIVB) – A new government regulation could have a big impact on your rights as a consumer– rights we are often forced to give up just to get a credit card or open a checking account.

It is called “forced arbitration”, and if you have ever read the lengthy, multi-page, single-spaced consumer agreement for your credit card, your insurance policy, or bank accounts you will see it.

These are often a take-it-or-leave-it proposition: If you want the credit card, if you need the insurance, if you want to rent a car, you have to agree to take any disputes to arbitration, and you are prohibited from taking the company to court.

A government watchdog, the U.S. Consumer Financial Protection Bureau is in the process of restricting those forced arbitration clauses, which also preclude you from taking part in class action lawsuits.

Those arbitration clauses, also known as “alternative dispute resolution” (ADR) will usually chase lawyers away, according to Matthew Parham, an attorney for the Western New York Law Center.

“Even if you have an open-and-shut case, as an attorney, most lawyers will not take cases that are going to have to go to arbitration.”

Parham said the WNY Law Center has declined to take consumers with arbitration clauses in their contracts because of the uncertainty, “So you have to turn people away that you know have open-and-shut cases–where their rights were clearly violated–and you have to tell them, I’m sorry you are out of luck.”

Parham added, the CFPB’s new regulation would apply only to participating in class action lawsuits, individual disputes would still be subject to arbitration. provides commenting to allow for constructive discussion on the stories we cover. In order to comment here, you acknowledge you have read and agreed to our Terms of Service. Commenters who violate these terms, including use of vulgar language or racial slurs, will be banned. Please be respectful of the opinions of others. If you see an inappropriate comment, please flag it for our moderators to review. Note: Comments containing links are not allowed.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s