It just became easier for banks to screw you over

VP Mike Pence cast the deciding vote to repeal a rule that helped people sue banks.

A year after the Wells Fargo phony account scandal and months after the Equifax data breach, U.S. lawmakers just made it harder for Americans to sue financial companies.

The U.S. Senate voted on Tuesday night to repeal an Obama-era rule that stopped banks and credit card companies using clauses that prevent customers bringing class action lawsuits against them.

Vice President Mike Pence had to cast the deciding vote, which ended 51-50 after Republicans Lindsey Graham and John Kennedy joined Democrats in voting against the repeal of the Consumer Financial Protection Bureau rule introduced last July.

Reuters reports Republicans saw the rule as an example of governmental overreach, but the vote also represents the first major victory for Wall Street under the Trump administration.

CFPB Director Richard Cordray, a Democrat appointed by former President Barack Obama, told Reuters: "Wall Street won and ordinary people lost."

"This vote means the courtroom doors will remain closed for groups of people seeking justice and relief when they are wronged by a company," he added.

The rule banned "arbitration clauses" that are often tucked away into the fine print of financial contracts, and as CNN explains, are used as a way to resolve disputes outside the court system, making it harder for people to sue a bank.

The network notes the move would affect tens of millions of Americans who are often unaware they're covered by an arbitration clause when signing up for a credit card, bank account or prepaid card.

The LA Times reports the ban on arbitration clauses was applauded by consumer rights groups at the time, who said it gave average people more power to fight industry abuses like the Wells Fargo scandal, where 5,000 workers created more than 2 million phony accounts in existing customers' names.

But President Donald Trump "applauded" Congress for repealing a rule he says gives consumers "fewer options for quickly and efficiently resolving financial disputes," the LA Times added.

These clauses featured in the Equifax scandal

You might be familiar with arbitration clauses if you've been following the Equifax scandal.

After revealing a data breach that affected 145.5 million Americans, the credit reporting bureau encouraged people to sign up for its free credit protection monitoring service.

However, in the fine print it said that by signing up, customers were giving away their rights to join a class action lawsuit.

After an uproar ensued, Equifax had to clarify that people could indeed sue them if they had their identities stolen.

Next Up