Scott: Defrauded Students Deserve Their Day In Court
WASHINGTON – Ranking Member Bobby Scott (VA-03) issued the following statement on the floor of the House of Representatives during debate on H.J. Res. 111, which would repeal the Consumer Financial Protection Bureau’s rule that bans forced arbitration which protects consumers, many of whom are private student loan borrowers:
“Mr. Speaker, I rise today in opposition to H.J. Res. 111 which will overturn the Consumer Financial Protection Bureau’s rule prohibiting forced arbitration clauses in many consumer contracts, including student loan contracts.
“Banks and large corporations often take advantage of ordinary Americans by burying forced arbitration clauses in boiler plate fine print in standard contracts. When corporations force consumers to secretly arbitrate with handpicked firms which rely on those same corporations for repeat business, the system is rigged.
“Take for example, Matthew, who enrolled in a for-profit aviation school that closed before Matthew could finish his degree. At the recommendation of the school, he had taken out $56,000 in private student loans. With debt and no credential, because the school had closed, Matthew joined a class action with thousands of other students. But due to a class action ban in the loan contract, the court ruled that thousands of individual students must individually settle their disputes with the bank in arbitration, and that means each individual student had to hire their own lawyer, take time off to present their case, and everything else you have to do to present the case, and that’s why most victims of this kind of fraud will never collect what they are owed. And if each victim only loses a little bit, virtually nobody will bring a claim. As for Matthew, the lender has still not settled his case and his loans have ballooned to more than $100,000 with interest.
“With the class action, at least you can achieve an injunction so that the corporation will stop. Each plaintiff might receive a little bit, but without the class action, the corporation is free to continue the fraud.
“Without CFPB’s rule, banks will continue to use forced arbitration clauses to advance the special interests of big business at the expense of innocent victims who will be ripped off.
“Mr. Speaker, I urge my colleagues to stand with consumers and reject the repeal of this important CFPB rule. Vote no on H.J. Res. 111. I yield back. “
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