U.S. Senator Sherrod Brown (D-OH) has introduced a bill in the Senate that would prohibit banks and other financial institutions from using forced arbitration clauses against consumers seeking restitution.
Financial companies often use arbitration clauses to avoid a jury trial or prevent consumers from joining a class action lawsuit. With arbitration clauses, consumers in dispute participate in a private arbitration procedure. Brown said the procedures are inconvenient and expensive, and consumers rarely win out. Brown said clauses are usually buried in long, dense agreements and are usually non-negotiable.
The Fairness in Arbitration for Consumers Act would prohibit this practice by amending the Consumer Financial Protection Act 2010 to prohibit pre-dispute arbitration agreements and class action waivers in contracts. consumer financial products or services. Under the bill, such agreements would not be valid or enforceable.
“Forced arbitration clauses allow big business to shirk responsibility and silence victims, giving Wall Street more power over workers and their families,” said Brown, chairman of the U.S. Senate Banking Committee. , housing and urban affairs. “Too many consumers miss them and are driven to cede companies their right to sue. This bill will remove these clauses to finally end this abusive practice of financial products and services and give Americans a fighting chance against powerful vested interests.
The bill is co-sponsored by US Sens. Brian Schatz (D-HI), Raphael Warnock (D-GA), Elizabeth Warren (D-MA), Robert Menendez (D-NJ), Chris Van Hollen (D-MD), Dianne Feinstein (D-CA), Bernie Sanders (I-VT), Edward Markey (D-MA), Jack Reed (D-RI), Richard Blumenthal (D-CT), Alex Padilla (D-CA), Ron Wyden (D-OR), Sheldon Whitehouse ( D-RI), Mazie Hirono (D-HI), Amy Klobuchar (D-MN), Catherine Cortez Masto (D-NV), Dick Durbin (D-IL), Cory Booker (D-NJ), Bob Casey (D -PA), Kirsten Gillibrand (D-NY) and Ben Ray Luján (D-NM).
“When Americans who use payday loans, private student loans, credit monitoring and credit cards are defrauded by big banks and financial institutions, they are forced into a one-sided, informal system where they have no no meaningful chance of seeking justice or obtaining accounts. This bill will restore the right of Americans to hold big banks accountable for fraud and other wrongdoing. We thank Senator Brown for his leadership on this issue,” said Linda Lipsen, CEO of the American Association for Justice.
The bill has been endorsed by the American Association for Justice, Public Citizen, UnidosUS, US PIRG, Center for Responsible Lending, Consumer Federation of America, Americans for Financial Reform, National Association of Consumer Advocates, and the National Consumer Law Center.