Our senator, Mike Crapo, has thrown his lot in with Wells Fargo and predatory lenders instead of veterans and ordinary Americans. I don’t know any other way to put it.
Of all the things Sen. Crapo could spend his time on in Washington, he now wants to take away a vital consumer protection right that gives ordinary Americans a shot in court against shady loan sharks or those Wells Fargo banks you can find all over Idaho.
Sen. Crapo is actively fighting to overturn a rule that ended the unfair practice of forced arbitration — a tactic devised by well-paid corporate attorneys for Wall Street banks, payday lenders and other shady actors to block consumers from challenging illegal behavior in court.
Forced arbitration is when companies bury a clause in the fine print of contracts that oblige people to give up their right to go to court, and take any complaints into secret proceedings overseen by an arbitrator. It’s no surprise they side with the corporation 93 percent of the time. Since arbitration is a secret process, consumers are often barred from sharing their stories with law enforcement or the press, allowing big banks like Wells Fargo to cover up widespread fraud.
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After a study found that forced arbitration lets banks get away with breaking the law, the Consumer Financial Protection Bureau decided to do something about it. This agency helped bring to light how Wells Fargo saddled its customers with checking accounts and credit cards they didn’t want. About 14,000 of those accounts were with Idahoans, by the way.
The Wells case is a perfect example of why Idahoans should care about ending forced arbitration — and why Sen. Crapo should be on their side. After CFPB helped fine and recover $185 million from Wells Fargo for opening as many as 3.5 million fraudulent accounts and credit cards nationwide, we learned customers had been trying to sue over fake accounts since at least 2013.
However, the “ripoff clause,” as it’s become known, buried in the fine print forced them into secret arbitration that Wells controlled. That let Wells Fargo continue stealing from its customers for years.
Payday lenders are another supporter of forced arbitration for whom Crapo is working hard, since 99 percent of payday loan contracts include a ripoff clause. Idaho payday lenders typically charge 652 percent interest on a two-week loan. Annually, these high-cost lenders drain $30.8 million in payday fees — a significant loss to our state’s economy — and prey particularly on Idaho’s communities of color and 121,000 veterans.
One of these veterans, Raymond Chaney, found himself kicked out of his apartment in Boise after borrowing $400 from an internet payday lender that then drained every cent from his bank account. Mr. Chaney served our country. The least he should expect is for his elected representative to serve his interests — and not those of the banks and legalized loan sharks who are ripping us off.
Jack F. Anderson, of Meridian, is the former director of the Legal Services Division of the National Economic Development Law Center, a project of the Earle Warren Legal Institute, University of California, Berkeley.