Duckworth on Senate Floor: Overturning CFPB’s Arbitration Rule Would Harm Servicemembers Who Are Victims of Scams, Fraud & Abuse
[WASHINGTON, D.C.] - U.S. Senator Tammy Duckworth (D-IL) delivered a powerful speech tonight urging her colleagues to oppose an effort from Senate Republicans to restrict the rights of consumers and Servicemembers who are victims of scams, theft, fraud and abuse. Speaking on the Senate floor, Duckworth shared examples of Servicemembers who filed lawsuits to hold unscrupulous financial institutions accountable and she reminded her colleagues about the recent outrage Equifax and Wells Fargo provoked by trying to steer consumers they had taken advantage of into arbitration. The Senate is scheduled to vote tonight on whether to block a new Consumer Financial Protection Bureau (CFPB) rule that would prevent corporations from forcing Americans into so-called "forced arbitration agreements" to settle disputes, which corporations are overwhelmingly likely to win, and rob consumers of their right to sue. Video of Duckworth's speech is available here.
"It's common to hear stories throughout my state of Illinois - and throughout the military community - of Servicemembers being taken advantage of through predatory loans, scams, abuses and fraud. That's because active-duty Servicemembers are particularly vulnerable consumers, especially when they are deployed. Corporations and scam-artists know this and they take advantage of it," said Senator Duckworth. "The CFPB's forced arbitration rule could help protect our Servicemembers from this sort of abuse, but it seems that a few of my colleagues want to make it harder for military families to get by. That's a shame. A vote to overturn it is a vote against our military and against those who wake up every single day to serve and protect the greatest nation on the face of the earth."
While many Americans, including millions of Servicemembers, have participated in litigation that have recouped hundreds of millions of dollars from corporations that had defrauded or otherwise abused them, the CFPB found that companies that forced consumers into arbitrations won a whopping 91% of those claims.
A full copy of Duckworth's remarks are below:
I am here to speak out in opposition to this misguided effort to overturn the Consumer Financial Protection Bureau's arbitration rule, which protects the rights of consumers and protects our brave Servicemembers and Veterans from being taken advantage of by unscrupulous financial institutions.
It was only a couple of weeks ago that we had the CEO of Equifax up here on Capitol Hill testifying about how his company had failed to protect Americans' private financial information and put more than 140 million consumers at risk of fraud or worse.
And that wasn't too long after we had the CEO of Wells Fargo here testifying about how his company had defrauded millions of consumers by forcing them into accounts and fees they never signed up for and didn't agree to.
The American people were outraged by these scandals - and with good reason.
Both of these companies had committed serious wrongdoings-and they admitted it.
But that didn't stop either from trying to shield themselves from the legal liability their own actions had risked.
Both of these companies tried to prevent the people they had taken advantage of from holding them accountable in court by using what are known as "forced arbitration" clauses.
They thought-and it seems they were right-that if they could stop people from suing them for their wrongdoing and instead force them into private arbitration that heavily favors mega-businesses at the expense of consumers, they'd have a better shot at saving money for their company.
They didn't care about consumer rights or even justice. They just wanted to make as much money as they could, legally or illegally, then get out of dodge as cleanly as possible.
But because the American people were so outraged by these scandals, we noticed what they were trying to do.
The actions of both companies caused an uproar that ultimately led them to back down and ensure American consumers didn't have to give up their right to a day in court just for doing business with these companies.
Those sorts of forced arbitration clauses were exactly what the CFPB was trying to stop when it implemented the rule my colleagues on the other side of the aisle are trying to repeal tonight.
Wells Fargo and Equifax's attempts to force consumers into mandatory arbitration clauses should have been a lesson, but I guess those working to reverse this rule here tonight didn't learn it.
It's common to hear stories throughout my state of Illinois - and throughout the military community - of Servicemembers being taken advantage of through predatory loans, scams, abuses and fraud.
That's because active-duty Servicemembers are particularly vulnerable consumers, especially when they are deployed.
They get a guaranteed paycheck, but they also have limited time to read their credit card statements and keep up with security breaches to see if their identities have been stolen.
Servicemembers are also frequently on the move between deployments and base relocations, often separated from their spouses and families for long periods of time.
Despite that, they still need to wire money when emergencies happen, they still need to pay bills, and their focus isn't always on whether a loan they took out has hidden fees - or if a company is charging them a higher rate than they're supposed to.
What they are focused on and rightly so is carrying out their mission often in places like Afghanistan.
Corporations and scam-artists know this and they take advantage of it. The CFPB's forced arbitration rule could help protect our Servicemembers from this sort of abuse, but it seems that a few of my colleagues want to make it harder for military families to get by.
That's a shame. Abusive corporate practices left unchecked not only cause incredible financial difficulty for Servicemembers and their families, but it also has national security implications, directly impacting military readiness.
In the military, bad credit can affect security clearances and advancement. When DoD loses qualified Servicemembers because of financial instability, they also lose mission capability and the significant investment made in training. This is an expensive loss. DoD estimates that each separation from service costs taxpayers more than $57,000.
Corporate abuse also causes personal difficulties. When someone is deployed, the last thing they should have to worry about is whether their house is going to be foreclosed on or their car is going to be re-possessed because they were the victim of a scam.
When they are going into battle or heading out on a mission, the last thing our troops should be thinking about is how a company took advantage of the fact that they were out of the country - and how there is so very little they can do about it.
Unfortunately, this isn't a hypothetical issue - Servicemembers get taken advantage of all the time. And we have seen countless times how their ability to file lawsuits holds bad actors accountable.
Not too long ago, the banks Santander & Wells Fargo paid tens of millions to resolve lawsuits that were filed because they were illegally repossessing Servicemember's cars.
J.P. Morgan Chase paid $27 million to settle a lawsuit from Servicemembers who were being overcharged for the mortgages.
And student loan servicer Navient paid 78,000 Servicemembers $60 million after overcharging them on their student loans.
In each of these instances, Servicemembers, sometimes with the help of the government, filed a lawsuit to get relief and hold these financial actors accountable.
But when companies force our Servicemembers-or any consumer-into arbitration, military families lose the right to hold wrongdoers accountable.
That's what's happened to Archie Hudson, a disabled Veteran, father of two and husband from Waynesboro, Mississippi.
A few years ago, Archie requested a loan from Wells Fargo to replace his home's windows. Instead, he received a Wells Fargo credit card, along with sky-high interest rates and a forced arbitration clause hidden in the fine print.
He didn't realize it at the time-like the millions of others Wells Fargo scammed-but it ultimately helped ruin his credit.
When Archie tried to get his day in court, he was instead forced into an arbitration proceeding that favors lenders over consumers.
He's not alone - the vast majority of people who have been forced into arbitration could tell you that the system is rigged.
When the Consumer Financial Protection Bureau first looked into this issue, they found that when consumers file an arbitration claim against a company that takes advantage of them, they have to pay an average of $161 in filing fees and they almost always lose.
Companies, on the other hand, won a whopping 91% of the time they go into arbitration against consumers.
On average, the consumer then had to pay $7,725 in damages to further pad corporate profits.
Banks sometimes try to defend these clauses by saying the reduced legal liability helps them reduce costs for consumers. But there's absolutely no evidence that that is true.
In fact, when companies have added these forced arbitration clauses in the past, the evidence suggests that they never reduce costs for consumers. These clauses simply mean bigger profit margins for those that break the law.
There's a reason so many military and Veterans Service Organizations like the American Legion, the Air Force Association, the Marine Corps League, the National Guard Association, Vietnam Veterans of America and groups like the AARP oppose this effort.
Look, I'm not naïve-I get that companies, especially banks, are in the business of making money.
It makes sense that they would want to force all their customers into arbitration because that saves them money.
But why on earth would my colleagues here in the Senate go along and help them rob Servicemembers and consumers of their rights to go to court? Why would we allow bad actors to get off scot-free?
If they believe that our Servicemembers are unfairly getting rich off of suing companies that wrong them, they should say that.
If they believe companies that break the law should be shielded from having to answer for their illegal actions in court, they should say that.
But we shouldn't let them hide behind cutting regulations. I'm all for cutting needless red tape, but the arbitration rule is an example of a regulation that actually helps Americans. It helps our Servicemembers and our military families.
A vote to overturn the Arbitration Rule is a vote against our military and against those who wake up every single day to serve and protect the greatest nation on the face of the earth.
Next Article Previous Article