U.S. Representative Ed Royce (R-Calif.) questioned witnesses on the impact of eliminating class-action lawsuit waivers on those offering credit monitoring services during a Financial Institutions and Consumer Credit Subcommittee hearing entitled “Examining the CFPB’s Proposed Rulemaking on Arbitration: Is it in the Public Interest and for the Protection of Consumers?”
“The Credit Repair Organizations Act, CROA, is a strict liability consumer protection statute that Congress passed to defend consumers against false claims of ‘fixing’ credit reports. Unfortunately, access to credit monitoring services provided by credit bureaus and others has been threatened by the courts moving away from Congress’ original intent with CROA. Mr. Pincus, what’s the impact of eliminating class-action lawsuit waivers for those under CROA’s jurisdiction that offer credit score monitoring?” asked Rep. Royce.
“Unfortunately it will open the door to these very large, very draconian class-actions that can really impose and threaten hundreds of millions, maybe more, in liability. In the real world, we don’t know whether it’s meritorious or not, but the company can’t take the chance. It’s either going to have to pay a lot of money in settlement, which is going to change its whole business structure, or it’s going to conclude it can’t be in …read more
Source:: U.S. Rep. Ed Royce