Companies that include 'arbitration-only' clauses in their service agreements and contracts might need to revise their terms soon. Many financial companies commonly have terms the account owner agrees to upon accepting the service. The terms forfeit the consumer's right to pursue litigation. These terms are referred to as an arbitration-only clause. In October 2015, the Consumer Financial Protection Bureau (CFPB) proposed rules that financial companies might need to follow that would allow consumers the ability to take part in a class-action lawsuit. Some credit card companies make arbitration-only clauses a requirement for consumers, which means their choice to use the credit card service remains conditional upon accepting the terms. The proposed rules set forth to remove this condition.
Individuals who can pursue a claim through litigation might move to a trial at some point. Jury trials offer substantial compensation opportunity. An insurance dispute attorney can explain more. As the rules currently stand, if a consumer has accepted an arbitration-only clause their own course of resolution would be in arbitration. Arbitration proceedings are often final and legally binding. These proceedings involve an arbitration panel that decides the settlement. (Mediation does not involve a panel. Instead, a mediator goes back and forth between the parties until a negotiation is mutually agreed.) Arbitration and mediation are usually less costly than a jury trial, which could be unpredictably long and involve court costs and greater attorney fees.
Many financial companies have been able to avoid legal disputes in court because of their arbitration-only clauses. Consumers have had little recourse with the current regulations. Reports show payouts through arbitration are fairly small when compared with cases that move to trial. According to a recent piece in the New York Times, a study "showed that relatively few people ever make it to arbitration."
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