WASHINGTON (Reuters) - The U.S. Senate will soon likely vote to kill a new ban on banks and credit card companies requiring customers to surrender their right to sue in order to open accounts, according to aides, lobbyists and activists.
Once Republican lawmakers either pass or abandon their latest effort to redo healthcare, which could happen as early as Tuesday evening, they will take up a resolution to kill a Consumer Financial Protection Bureau rule finalized in July, according to multiple lobbyists. The resolution passed the House of Representatives last month.
The rule says financial companies must allow customers to participate in class actions, lawsuits where people alleging the same wrong band together to cover litigation costs, and cannot force them to only settle disputes in closed-door arbitration.
Republicans are optimistic they can carry the resolution over the simple-majority threshold required by the Congressional Review Act, lobbyists said. After that, a signature from President Donald Trump, a fellow Republican, will nullify the rule and bar the CFPB from ever enacting a similar regulation.
Republicans are working to ensure they have the votes. The party has a slim margin in the Senate, so it cannot lose two more votes because Republican Senator Lindsay Graham has said he will vote against it, and the Democrats are solidly opposed.
Since a 2011 Supreme Court decision allowing the practice, almost every U.S. company has included “mandatory arbitration” clauses in contracts for services from nursing homes to mobile phones. Companies say class actions only benefit lawyers and arbitration provides greater settlement awards.
The clauses are prevalent in the Trump family’s businesses, according to a recent survey by consumer advocacy group Public Citizen. Trump hotels, golf clubs and winery all require customers to sign away rights to join class actions.
The CFPB began drafting the rule under former President Barack Obama, a Democrat. Rule supporters cast arbitration as a secretive process stacked against victims where arbitrators are frequently on company payrolls. They say the rule restores victims’ constitutional rights.
Equifax Inc (EFX.N) ignited outrage by initially including arbitration clauses in free credit monitoring it offered to victims of a massive hack it suffered. Democrats hope that anger will fuel opposition to the resolution.
Republicans Senators Susan Collins and Lisa Murkowski, who frequently break party ranks, and freshman Senator John Kennedy, are under pressure to vote to repeal the rule, progressive and consumer groups say. Party leaders also want to ensure Republican Senator Luther Strange, in a Tuesday election in his home state, and Republican Senator John McCain, undergoing cancer treatment, are present to cast votes.
(This version of the story corrects Senator Kennedy’s first name to John from Jack in last paragraph)
Reporting by Lisa Lambert and Pete Schroeder; Editing by Phil Berlowitz