Banking and Finance Law Daily Bills introduced to curtail forced arbitration
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Monday, March 4, 2019

Bills introduced to curtail forced arbitration

By Nicole D. Prysby, J.D.

A number of bills have been introduced in the Congress that would end the practice of forced arbitration in disputes regarding employment, consumer, antitrust, or civil rights. The proposed legislation includes the Arbitration Fairness for Consumers Act, the Forced Arbitration Injustice Repeal Act, and the Justice for Servicemembers Act.

Several members of Congress recently announced the introduction of bills to end the practice of forced arbitration in disputes regarding employment, consumer, antitrust, or civil rights. Sen. Sherrod Brown (D-Ohio), ranking member of the Senate Banking Committee, introduced the Arbitration Fairness for Consumers Act. Rep. Hank Johnson (D-Georgia) and Sen. Richard Blumenthal (D-Conn) introduced House and Senate versions of the Forced Arbitration Injustice Repeal (FAIR) Act.

Brown’s announcement pointed out that the Arbitration Fairness for Consumers Act would reverse 2017 legislation that permits financial companies to force consumers to give up their right to a day in court or their right to join a class action suit to seek relief. The proposed legislation (S. 630) would amend the Consumer Financial Protection Act to prohibit predispute arbitration agreements that force arbitration of consumer financial product or service disputes. It would also prohibit agreements and practices that interfere with the right of individuals and small businesses to participate in a class action related to a consumer financial product or service dispute.

The FAIR Act announcement from Johnson and Blumenthal explained that the measure would eliminate forced arbitration clauses in certain cases, but would allow consumers and workers to agree to arbitration after a dispute occurs. The proposed FAIR Act (H.R. 1423, S. 610) would amend Title 9 of the U.S. Code to prohibit predispute arbitration agreements that force arbitration of employment, consumer, antitrust, or civil rights disputes, and prohibit agreements and practices that interfere with the right of individuals, workers, and small businesses to participate in class actions related to an employment, consumer, antitrust, or civil rights dispute. The announcement cited support from a number of individuals and organizations, including House Judiciary Chairman Rep. Jerrold Nadler (D-NY) and Chairman of the House Antitrust Subcommittee Rep. David Cicilline (D-RI). Cicilline has also introduced a separate bill on forced arbitration, the Justice for Servicemembers Act.

Consumer Reports submitted a letter to Blumenthal in support of the FAIR Act, noting that it would reverse the spread of forced arbitration clauses being slipped into standard-form contracts for such basic products and services as credit cards, apartment leases, mobile phone contracts, and nursing home admissions. CR stated that the arbitration process has been forced on consumers in a one-sided manner, allowing corporations to set the rules and costs for arbitration and resulting in a lack of protection for consumers against corporate abuses or unsafe products.

Companies: Consumer Reports

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