WASHINGTON (Reuters) - The largest U.S. veterans service organization on Thursday urged President Donald Trump to veto recent legislation allowing financial companies to block customers from banding together to sue, saying it would hurt members of the armed forces.
The American Legion, which rarely speaks out on bank policy or politics, said in a statement it would “not be silent while banks and payday loan shops rip off servicemembers and veterans”. But it will likely have a hard time convincing Trump to veto the resolution to roll back the Obama-era policy.
The Consumer Financial Protection Bureau, an independent federal regulator, finalized a rule this summer that barred banks, credit card issuers and other financial companies from requiring customers to agree not to join group lawsuits and only take any potential disputes to closed-door arbitration.
In a vote of 51 to 50, the Senate on Tuesday passed a resolution killing the rule and prohibiting regulators from enacting a similar one in the future. The House of Representatives approved the resolution earlier, and now all that is needed to erase the rule is for Trump to sign it into law.
”Our membership has stated unequivocally that we are opposed to situations where our military and veterans’ financial protections are chipped away to increase the profits of the big banks,” said American Legion National Commander Denise Rohan. “Repealing the CFPB arbitration rule takes away consumers’ most effective tool to protect themselves against predatory lenders.”
Servicemembers can struggle to sue companies individually because they cannot afford legal costs, move frequently for work, or are deployed overseas, the Legion said.
In class actions, individuals with the same complaint band together to lower lawsuit costs.
Many veteran organizations tried for months to stop the Republican-led Congress from passing the resolution, and other advocacy groups have also pressed for a veto.
That is a long-shot.
The White House issued a statement shortly after Tuesday’s vote applauding the resolution, saying the CFPB rule would have given consumers “fewer options for quickly and efficiently resolving financial disputes” and opened “the door to frivolous lawsuits by special interest trial lawyers.”
The rule’s supporters say arbitration is rigged against consumers because it is secretive, does not set legal precedent, and is controlled by the companies. They also say the right to sue is enshrined in the U.S. Constitution.
Reporting by Lisa Lambert; Editing by Andrew Hay