In light of the recent Equifax breech, which has left millions of consumer’s personal data compromised, there has been quite a bit of conversation regarding the appropriate response and regulatory reform that could reduce the chance for another occurrence such as this one, as well as the avenues consumers are afforded to seek retribution.
One of these responses comes in the form of a letter to two U.S. Senators, signed by over 400 college and university professors, defending the Consumer Financial Protection Bureau’s (CFPB) arbitration clause, which has been widely contested amongst the industry as well as representatives on Capitol Hill, as reported by MarketWatch.
“Class action lawsuits are an important means of protecting consumers harmed by violations of federal or state law,” the letter says. “Class actions enable a court to see that a company’s violations are widespread and to order appropriate relief.”
According to MarketWatch, the letter was sent on September 25 to harken back to the passing of the Seventh Amendment of the U.S. Constitution, which says, “n suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.”
The arbitration clause has important ramifications to a potential suit that involves so many consumers, and once again brings the highly debated rule into the limelight.
Another issue that has been brought up by Adam Levetin, Professor of Law at the University of Georgetown in an Op Ed published on the Huffington Post, is that credit reporters have no reason to care about consumers, and there needs to be liability put in place that requires them to care.
According to Levetin, Equifax is the second-most complained about company to the CFPB, and their only major competitors are Experian and Transunion, which rank in the top five on CFPB complaints. All three companies get their information from lenders, insurers, companies, and employees, rather than consumers. Unless changes are made to regulation, Levetin says, “Our entire consumer credit economy is built on the foundation of credit reports, so creditors, insurers, and employers aren’t about to stop using credit reports any time soon, even if the reliability of the reports diminishes.”