Financial and Workplace Predators Are Getting Away With Hiding Their Misdeeds, and Congress Could Make It Even Easier

What do fake bank accounts and sexual harassment have in common? Both can flourish unchecked through fine print legal language. Forced arbitration clauses can suppress victims’ claims, and isolate those who do complain, meaning no change in corporate behavior.

Congress is expected to vote today to block a rule promulgated by the Consumer Financial Protection Bureau that restores consumers’ day in court. And, this fall, the Supreme Court will rule on a trio of workplace forced arbitration cases. It’s high time that we know what’s at stake.

More and more big corporations are forcing us to sign arbitration clauses

Corporate employers, credit card companies and Wall Street banks are increasingly forcing employees and consumers to sign away their day in court and instead take complaints to secret arbitration hearings one-by-one. A recent study says that over 65% of the largest corporations require employees to sign these forced arbitration clauses. This means that victims of bank fraud and of workplace sexual assault cannot have their day in court. These victims can’t join with other co-workers or consumers to fight these practices together either, because most of those same corporations prohibit any group or collective claims in the private and secret arbitrations that they’ve imposed.

Big Banks are using these “rip-off” clauses

When people started suing Wells Fargo over the millions of fake bank accounts it created, the bank sent people to private individual arbitration. If Wells Fargo hadn’t forced individuals to sign these rip-off clauses, they could’ve filed a class action against Wells Fargo in court. But Wells Fargo didn’t steal enough from any one victim to make it worth it to hire a lawyer and go to arbitration. This means that the bank can steal millions of dollars in false bank account charges, and harm people’s credit, as long as it just steals a little bit from each individual.

The Consumer Bureau issued a rule last year to stop these rip-off clauses, but bank lobbyists are pressuring Congress to block it. Senators should stand with consumers and support this well-reasoned and data-supported CFPB rule.

Harvey Weinstein and Wells Fargo: Keeping wrongdoing in the shadows

Forced arbitration also means that workplace patterns of harassment or assault do not emerge in public. So, employers do not change their predatory practices, because payouts are relatively small and privatized settlements do not alter behavior. Nondisclosure agreements like those that Harvey Weinstein used work the same way.

These fine print clauses can suppress public knowledge about abuses for a long time. It took at least two years from the first Wells Fargo lawsuit before the problems made the news. Ongoing sexual harassment and assault at Fox News and the Weinstein Company did not become public or change individual and company behavior until Gretchen Carlson settled against Roger Ailes and until investigative journalists broke the story of Harvey Weinstein’s decades-long reprehensible behavior. The corporate boards of the companies expressed shock and dismay upon publication of these stories, but this should not have gone on behind closed doors for this long.

Congress should not repeal the Consumer Bureau rule, and the Supreme Court should rule that workers should be able to come together in arbitration with others—our rights to have our grievances heard in court and to speak publicly about predatory practices are basic protections we should not have to trade away.