Kilmartin joins call for new arbitration rules

PROVIDENCE – Attorney General Peter F. Kilmartin and his colleagues in 15 other states are urging the federal government to adopt rules that protect consumers from mandatory arbitration clauses in important contracts.
Mandatory arbitration clauses are inserted by financial institutions into critical contracts for financial products such as credit cards, payday loans or checking-account contracts. In many cases, the language can prohibit consumers from pursuing a claim against a financial institution in court or makes it too expensive to form a class-action lawsuit.
In a letter to the U.S. Consumer Financial Protection Bureau, Kilmartin and his fellow attorneys general asked bureau Director Richard Cordray to protect “consumers’ fundamental rights” to assert their claims.
The letter was sent to the bureau as part of the agency’s research into mandatory bureau clauses. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act requires the agency to conduct extensive research before determining whether mandatory arbitration clauses are harmful to consumers before issuing any regulations.
Financial institutions tuck the arbitration into the fine print of contracts and consumers often are not even aware of what they are agreeing to, Kilmartin said in a statement. The institutions often make it mandatory that consumers agree to submit to the arbitration process before opening a checking account or issuing a credit card.
Massachusetts Attorney General Martha C. Coakley also joined onto the letter. •

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