A bill has been introduced in the Senate by Sen. Sherrod Brown [D-Ohio], the chairman of the Senate Banking Committee, that would ban forced arbitration clauses in the financial services industry.
A copy of the bill, S. 3755, called the Arbitration Fairness for Consumers Act, can be accessed by clicking here.
The bill has a number of powerful Democratic co-sponsors, including Sen. Elizabeth Warren [D-Mass.], Sen. Bernie Sanders [I-Vt.], Sen. Edward Markey [D-Mass.], and Sen. Dianne Feinstein [D-Calif.]. It would amend the Consumer Financial Protection Act to prohibit pre-dispute arbitration agreements and class-action waivers in contracts for consumer financial products and services.
“Forced arbitration clauses let big companies hide from accountability and silence victims, giving more power to Wall Street over workers and their families,” said Sen. Brown, in a statement. “Too many consumers miss these and are tricked into signing away to corporations their right to pursue justice. This bill will remove these clauses to finally end this abusive practice for financial products and services, and give Americans a fighting chance against powerful special interests.”
A fact-sheet published by Sen. Brown claimed that consumers are granted relief in only 9% of arbitration disputes, compared with companies winning relief in 93% of cases brought against consumers.
If enacted, the applicability of the provisions would be for any consumer dispute or claim that occurs on or after the law goes into effect.
Many companies in the accounts receivable management industry have relied on arbitration agreements that were put in place between consumers and creditors when a transaction was initiated. Many agreements between consumers and creditors assign any of the rights in the agreement to agents working on behalf of the original creditor. Arbitration is a dispute resolution process that occurs outside of the courts. An unbiased third party hears arguments from both sides and renders a binding decision, which has limited rights to be appealed.
