The United States Supreme Court has essentially given lenders, credit card
companies and banks a license to commit fraud and steal from consumers
and small business. It did so in the case of
Concepcion v. AT&T Mobility by siding with large corporations while enforcing forced arbitration agreements
which are not negotiated and unconscionable in its terms. This license
to steal may soon be rescinded by the Consumer Financial Protection Bureau
("CFPB") under its power under the law commonly known as the
What is the CFPB?
The CFPB was established under the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010. The establishment of this agency followed the
most severe financial crisis faced by the United States since the Great
Depression. Beginning in 2007, home values crashed, savings shrunk, jobs
were eliminated and small businesses lost necessary financing. Consumers
were unable to obtain credit, and countless improperly made consumer loans
went into default. The United States is still struggling to recover. In
the 2000's, widespread failures in consumer protection occurred with
lenders taking advantage of consumers via gaps in the system.
Many Americans were left with too much debt, as well as loans they neither
understood, nor could afford. In response, President Obama established
the CFPB in June, 2009. The goal of the agency was to heighten government
accountability as well as to supervise and enforce laws pertaining to
lenders which might otherwise escape oversight. The agency was to essentially
protect American families from deceptive, abusive, and unfair financial
practices. Yet now, the Supreme Court is prohibiting this agency from
properly doing its job while protecting large corporations.
AT&T and American Express Cheating American Consumers?
The two cases in question involve AT&T and American Express, yet are
hardly inconsistent with business as usual for many large corporations,
no matter the cost to consumers. In both cases, the Supreme Court held
that the arbitration clauses (forced and usually buried deeply within
contracts signed by consumers) which ban trials and class actions, must
be enforced. This enforcement comes at a steep price, making it impossible
for consumers to hold these corporations responsible for breaking the law.
In the AT&T Mobility lawsuit, the plaintiff claims the company charged
potentially hundreds of thousands of consumers $30.22, illegally. Few,
if any, consumers would file a lawsuit to collect $30.22. California law
at the time prohibited class-action bans; therefore, a federal appeals
court struck down the arbitration clause, allowing consumers who were
cheated to join a class action suit. The Supreme Court, however, upheld
the arbitration clause.
Complex Antitrust Laws Prohibit Small Businesses from Holding
American Express Accountable
American Express v. Italian Colors Restaurant, American Express allegedly cheated Oakland's Italian Colors-as well
as 3.2 million other small businesses-out of approximately $5,200 each,
or $16.64 billion. Not only did the company cheat these small businesses,
they also may have violated antitrust laws. Both Visa and MasterCard settled
similar cases to the tune of $6.05 billion. It can be extremely difficult
and complex to prosecute an antitrust claim. For the restaurant in question
to recover its $5,200, it would have to spent anywhere from $300,000 to
a million dollars for an expert market analysis.
Because of this, the plaintiffs were forced to bring the suit as a class
action lawsuit. Once again, a federal court negated the American Express
arbitration clause and the Supreme Court reversed that decision.
CFPB Must Exercise Its Authority
The CFPB has the power to prevent these mandatory arbitration clauses and
class action bans, and the evidence before the agency is persuasive. Mandatory
arbitration clauses are specifically written as a means of allowing corporations
to break the law by suppressing claims by consumers who would never knowingly
agree to such tactics. In an attempt to escape being held accountable
to consumers, lenders have attempted to convince Congress to repeal CFPB's
authority to bar mandatory arbitration. These efforts, thankfully, failed,
and now it is up to the CFPB to do what they have been charged to do for
American consumers and small businesses.
Contact Our National Consumer Class Action Lawyers
To learn more about this legal issue or to discuss your case with one of our
national consumer protection lawyers, contact us at
1-800-355-3300 or 1-215-985-9177 or fill out our
confidential contact form.
The national consumer class action lawyers at Golomb & Honik have successfully
represented consumers in Philadelphia, Pennsylvania, New Jersey &
throughout the United States.