As financial services companies continue to battle the fallout from the financial crisis, the next big battle could come in the form of a new law that would give the consumer the ability to sue over the financial products they use.
In response to the fallout over the massive price hikes on credit cards and other products, a new bill called the Consumer Financial Protection Act of 2017 (CFPPA) is being introduced in Congress.
This bill would give consumers the right to sue banks for fraud and deceptive practices, and to seek redress through a class action lawsuit.
Under the proposed CFPPA, consumers would be able to sue a bank for deceptive acts, including not disclosing that a consumer may be under a contract with a third-party financial service company, which would mean a person’s account might not be charged back on time.
Under this new law, consumers could also pursue other remedies, including civil penalties, punitive damages, injunctive relief and the right for a consumer to sue for money damages.
The bill, which has the backing of Democratic Sens.
Elizabeth Warren (Mass.), Cory Booker (N.J.) and Al Franken (Minn.) and the support of the Consumer Federation of America, was introduced by the Consumer Finance Protection Bureau (CFFB) and passed the House on Monday by a vote of 205-193.
The CFPB has faced criticism from some members of Congress for failing to pass consumer-friendly bills in recent years.
For instance, the agency recently passed a rule that requires banks to provide customers with access to their bank statements.
The Consumer Financial Reform Act of 2010, passed by the U.S. House of Representatives in 2010, created a series of consumer protections that have remained in place to protect consumers in the wake of the financial meltdown.
In the wake for this bill, the CFPBs main concern is that consumers could lose the right of action, as the bill would not give them a mechanism to pursue these kinds of claims in court.
The consumer rights advocacy group Fight for the Future said the proposed bill is a clear step in the wrong direction.
The organization said the bill is “a step backwards” for consumer rights, as it would effectively eliminate the right and authority to file suit for unfair or deceptive acts and practices.
“It is a step backwards for consumer protections,” Fight for for the Futures spokesperson and co-founder Josh Shapiro said in a statement.
“The CFTPA is already outdated and ineffective, and consumers deserve better.”
The bill has been met with opposition from the Financial Services Roundtable, a bipartisan group of industry leaders, and consumer advocates.
In a statement, the group said that while the CFFB is an independent agency, it must still “adopt a new regulatory regime for financial products that includes stronger protections for consumers and consumers’ right to seek recourse.”