Consumer Financial Protection Bureau

Credit Unions Demand Jury Trial in Lawsuits Against Equifax

Lawsuit Underscores Importance of CFPB Forced Arbitration Rulemaking

Washington, D.C. – In the wake of the massive data breach at Equifax, which exposed sensitive personal information of the majority of American adults, small financial institutions have filed class action lawsuits against Equifax to recover financial harms related to the breach.

The first lawsuit, led by Summit Credit Union, details the significant financial costs that will be incurred by small financial institutions due to the Equifax breach. The second lawsuit, led by Bank of Louisiana, Aventa Credit Union, and First Choice Federal Credit Union, alleges that Equifax violated federal law.

“By teaming up with others, credit unions stand a better shot at taking on a big company that harmed them,” said Michael Best, Director of Advocacy Outreach at CFA. “Unfortunately, consumers are often thwarted from the same opportunity to be heard in front of a jury of their peers.”

Small financial institutions regularly group together to recoup losses from massive data breaches. For example, banks filed class action lawsuits against Target and Home Depot. However, when consumers seek to take on large financial companies like Equifax as a group, those companies exercise “forced arbitration” clauses that eliminate a consumer’s choice about how to resolve their claim.

“Credit unions understand firsthand that the ability of smaller entities to band together in court is crucial to address misconduct of more powerful bad actors like Equifax,” said Christine Hines, Legislative Director at the National Association of Consumer Advocates. “That’s why the CFPB issued its arbitration rule to restore this right for consumers.”

Under a new rule finalized by the Consumer Financial Protection Bureau, consumers can still be subject to forced arbitration, but they cannot be restricted from joining together with other consumers in group claims, including class action lawsuits.

When consumers have disputes with credit unions, credit unions typically offer them a choice on how to pursue their claim. According to data from the CFPB, 97% of credit unions do not force consumers into arbitration in their credit card agreements, while 60% of large banks did. According to the National Association of Federal Credit Unions, these forced arbitration arrangements are of limited value.” The organization also wrote to Congress that making arbitration voluntary leads to the best results.

Large banks are currently pressuring Congress to overturn the CFPB’s new rule that restores choice to consumers. Just as small credit unions should have the right to group together to recover losses from Equifax, advocates for consumers and military families across the country believe that every American deserves these rights, as well.

Contact: Michael Best, CFA, 202-939-1009; Christine Hines, NACA, 202-452-1989, ext.109

The Consumer Federation of America is an association of more than 250 non-profit consumer groups that, since 1968, has sought to advance the consumer interest through research, education, and advocacy.