Washington, D.C. – U.S. Senator Ron Wyden joined colleagues today in introducing legislation that would prohibit banks and other financial institutions from using forced arbitration clauses in Oregon and nationwide against consumers seeking restitution and justice.
“For too long now, companies considered ‘too big to fail’ have been exploiting their power over consumers through confusing arbitration clauses and secretive proceedings,” Wyden said. “It is time to rein in the power of mega-corporations by banning abusive arbitration agreements and deceitful class-action waivers.”
Financial institutions use arbitration clauses to take away consumers’ constitutional right to pursue a trial by jury or to join a class action lawsuit. Consumers with disputes are forced instead into private arbitration proceedings that are inconvenient, costly, and rarely lead to consumers prevailing. Companies are then not required to disclose any wrongdoing, corrective action, or even the facts of what occurred to other consumers and the public, while participating consumers have virtually no ability to appeal the decisions made by the arbitrators. Such clauses are typically non-negotiable, and companies frequently hide them in lengthy and dense agreements.
The Arbitration Fairness for Consumers Act would ban these abusive practices. The bill would amend Title X of the Consumer Financial Protection Act of 2010 to prohibit pre-dispute arbitration agreements and class-action waivers in contracts for consumer financial products or services. Under the legislation, such agreements would be neither valid nor enforceable.
The legislation is led by U.S. Senator Sherrod Brown, D-Ohio. Along with Wyden, the legislation was cosponsored by U.S. Sens. Brian Schatz, D-Hawaii, Raphael Warnock, D-Ga., Elizabeth Warren, D-Mass., Robert Menendez, D-N.J., Chris Van Hollen, D-Md., Dianne Feinstein, D-Calif., Bernie Sanders, I-Vt., Edward Markey, D-Mass., Jack Reed, D-R.I., Richard Blumenthal, D-Conn., Alex Padilla, D-Calif., Sheldon Whitehouse, D-R.I., Mazie Hirono, D-Hawaii, Amy Klobuchar, D-Minn., Catherine Cortez Masto, D-Nev., Dick Durbin, D-Ill., Cory Booker, D-N.J., Bob Casey, D-Pa., Kirsten Gillibrand, D-N.Y., and Ben Ray Luján, D-N.M.
A one-pager on the bill is here.
The bill text is here.
A web version of this release is here.