Banking & Credit

U.S. House Bans Forced Arbitration – Senate Needs To Take Action on This Critical Consumer Protection

The Forced Arbitration Injustice Repeal Act (FAIR ACT) Protects Consumers by Eliminating Clauses that Restrict Consumer Rights

Washington, D.C. – The U.S. House’s passage of the FAIR Act (H.R. 1423) is an essential step forward in preventing companies from restricting the legal rights of consumers though forced arbitration clauses. Forced arbitration consistently advantages companies and prevents wronged consumers from having access to justice. These clauses are confusing – often written in legal jargon or hidden in the fine print of contracts so that many consumers are unaware of their impact. They are also pervasive – over the past decade, forced arbitration clauses have made their way into a vast array of consumer contracts – including cell phone contracts, car loans, investment accounts, employment, and many consumer financial products including nearly half of all checking accounts.

A vote for the FAIR ACT is a vote to protect consumers, workers, investors, and small businesses against the corporate takeover of our judicial system. The bill passed by a 225 – 186 vote.

“We now call on the Senate to take up the measure. Without this action, the number of forced arbitration clauses in effect in the U.S. will only grow. Americans who overwhelmingly support banning forced arbitration should not wait any longer for the elimination of these clauses and the restoration of their rights,” stated Rachel Weintraub, Legislative Director and General Counsel.

“The public should not lose access to the courts their taxes pay for because of fine print contract clauses that no one reads. The Senate should immediately approve the FAIR Act,” stated Christopher Peterson, Director of Financial Services.

“Passage of the FAIR Act is also a win for investors. Currently, investors are forced into arbitration when they have a dispute with their brokers, where the deck is often stacked against them. In addition, there’s a new campaign to allow corporations to force shareholders into arbitration in order to immunize company management from being held accountable for fraud. The FAIR Act would ensure that investors get the choice to take their brokers and corporate wrongdoers to court, where investors have a fighting chance,” stated Micah Hauptman, Financial Services Counsel.

“Americans deserve their day in court, but when companies force consumers into signing away their rights, the chances of a fair outcome diminish drastically. We thank the House for taking this important step in eliminating these clauses from contracts for products consumers use every day including credit cards and checking accounts. We now need the Senate to act to protect consumers,” stated Leandra English, Director of Financial Services Advocacy and Outreach.