Senate Banking Committee Ranking Member Seeks to End ‘Forced Arbitration’ Agreements

U.S. Sen. Sherrod Brown’s proposal would reverse the 2017 decision to repeal the Consumer Financial Protection Bureau’s mandatory arbitration rule.

3/5/2019 1:30 PM

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Senate Banking Committee Ranking Member Seeks to End ‘Forced Arbitration’ Agreements

U.S. Sen. Sherrod Brown, D-Ohio, proposed an amendment to the Consumer Financial Protection Act this month to restore consumers’ rights to contest financial agreements in court or through class action lawsuits.

“Ending the use of forced arbitration in student loans, credit card agreements, and employment contracts gives working Americans a fighting chance against powerful special interests,” Brown, ranking member of the Senate Committee on Banking, Housing and Urban Affairs, said in a news release.

The Arbitration Fairness for Consumers Act (S. 630) would:

  • Prohibit pre-dispute arbitration agreements that force arbitration of future consumer financial product or service dispute; and
  • Prohibit agreements and practices that interfere with the right of individuals and small businesses to participate in a joint, class, or collective action related to a consumer financial product or service dispute.

In November 2017, President Donald Trump signed the legislation repealing the Consumer Financial Protection Bureau’s mandatory arbitration rule about a week after it passed with a narrow Republican majority vote on the Senate floor.

Before Trump’s approval, U.S. Senate Republicans, with Vice President Mike Pence casting the tie-breaking vote after a 50-50 split, overturned the CFPB’s rule to ban class action waivers in arbitration agreements in contracts for consumer financial products Oct. 24, 2017, ACA International previously reported.

“The Arbitration Fairness for Consumers Act would reverse that decision and prohibit financial companies from forcing consumers to give up their right to a day in court or their right to join a class action suit to seek relief,” according to the news release from Brown’s office.

ACA International supported the vote to repeal the CFPB’s arbitration rule. Although the CFPB’s rule did not outright prohibit arbitration agreements, its prohibition of class action waivers – coupled with new arbitral reporting requirements – was widely expected to act as de facto ban on the continued use of arbitration.  In 2016, ACA submitted a comment letter opposing the arbitration rule explaining the important role played by class action waivers in offering legitimate debt collectors, especially small businesses, a way to quickly and more easily defeat inappropriate class action lawsuits.

If you are interested in sharing articles and analysis on legal cases, industry laws and regulations or other relevant topics for possible publication with ACA International, email our Communications Department at comm@acainternational.org.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

Senate Banking Committee Ranking Member Seeks to End ‘Forced Arbitration’ Agreements

U.S. Sen. Sherrod Brown, D-Ohio, proposed an amendment to the Consumer Financial Protection Act this month to restore consumers’ rights to contest financial agreements in court or through class action lawsuits.

“Ending the use of forced arbitration in student loans, credit card agreements, and employment contracts gives working Americans a fighting chance against powerful special interests,” Brown, ranking member of the Senate Committee on Banking, Housing and Urban Affairs, said in a news release.

The Arbitration Fairness for Consumers Act (S. 630) would:

  • Prohibit pre-dispute arbitration agreements that force arbitration of future consumer financial product or service dispute; and
  • Prohibit agreements and practices that interfere with the right of individuals and small businesses to participate in a joint, class, or collective action related to a consumer financial product or service dispute.

In November 2017, President Donald Trump signed the legislation repealing the Consumer Financial Protection Bureau’s mandatory arbitration rule about a week after it passed with a narrow Republican majority vote on the Senate floor.

Before Trump’s approval, U.S. Senate Republicans, with Vice President Mike Pence casting the tie-breaking vote after a 50-50 split, overturned the CFPB’s rule to ban class action waivers in arbitration agreements in contracts for consumer financial products Oct. 24, 2017, ACA International previously reported.

“The Arbitration Fairness for Consumers Act would reverse that decision and prohibit financial companies from forcing consumers to give up their right to a day in court or their right to join a class action suit to seek relief,” according to the news release from Brown’s office.

ACA International supported the vote to repeal the CFPB’s arbitration rule. Although the CFPB’s rule did not outright prohibit arbitration agreements, its prohibition of class action waivers – coupled with new arbitral reporting requirements – was widely expected to act as de facto ban on the continued use of arbitration.  In 2016, ACA submitted a comment letter opposing the arbitration rule explaining the important role played by class action waivers in offering legitimate debt collectors, especially small businesses, a way to quickly and more easily defeat inappropriate class action lawsuits.

If you are interested in sharing articles and analysis on legal cases, industry laws and regulations or other relevant topics for possible publication with ACA International, email our Communications Department at comm@acainternational.org.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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