The Consumer Financial Protection Bureau has announced a proposal to restrict arbitration clauses that prohibit class-action lawsuits, giving borrowers more rights to sue banks and credit-card companies.

“Companies dispute costs will soar—consumers will be the losers,” said Alan Kaplinsky, a partner at Ballard Spahr and a pioneer in class action waivers.

He said that he’s seen most class action lawsuits settled with no money going to consumers. “Most of them are meritless,” he said. “They are brought by plaintiffs’ attorneys with no idea to prosecute the class action, but to extract a settlement and to be paid an attorney’s fee.”

Consumer advocates expressed a different viewpoint, saying that consumers are deprived of legal help by arbitration clauses, putting the balance of power with corporations.

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Consumer Financial Services
Consumer Financial Protection Bureau
Bank Regulation and Supervision