Durbin Cosponsors Bill To Protect Consumers By Banning Forced Arbitration In Financial Products
WASHINGTON – U.S. Senate Majority Whip Dick Durbin (D-IL) joined U.S. Senator Sherrod Brown (D-OH) in introducing the Arbitration Fairness for Consumers Act, legislation to prohibit banks and other financial institutions from using forced arbitration clauses against consumers who want to seek restitution and justice.
“For years, banks and financial institutions have manipulated consumers into surrendering their rights in exchange for banking services, but consumers should never have their ability to seek justice taken away from them,” said Durbin. “This legislation will correct an abusive practice that has allowed the balance of power to favor special interests at the expense of hard-working Americans for far too long.”
Financial institutions use forced 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 into private, closed-door arbitration proceedings that are not only inconvenient and costly, but in which the playing field is tilted so that consumers rarely prevail. Such clauses are typically non-negotiable, and companies frequently hide them in the fine print of contracts that are lengthy and dense.
The Arbitration Fairness for Consumers Act bans these abusive practices. The bill amends 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.
In addition to Durbin and Brown, the legislation is cosponsored by U.S. Senators 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), Cory Booker (D-NJ), Bob Casey (D-PA), Kirsten Gillibrand (D-NY), and Ben Ray Luján (D-NM).
A one-pager on the bill is available here.
The bill text is available here.
The legislation 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 (on behalf of its low-income clients).
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