STATEMENT: FAN Coalition Urges the House Financial Services Committee to Reject Legislation Stripping Federal Agencies of Authority to Restrict Forced Arbitration
FOR IMMEDIATE RELEASE
September 13, 2016
Christine Hines, National Association of Consumer Advocates, [email protected]
Amanda Werner, Americans for Financial Reform & Public Citizen, [email protected]
Laurie Kinney, Alliance for Justice, [email protected]
Sarah Jones, American Association for Justice, [email protected]
Fair Arbitration Now Coalition Urges the House Financial Services Committee to Reject Legislation Stripping Federal Agencies of Authority to Restrict Forced Arbitration
This morning, the Committee will mark-up the “Financial CHOICE Act of 2016” (H.R. 5983), which would roll back key provisions of the Dodd-Frank Wall Street Reform Act and block federal agencies from restoring crucial legal rights of consumers and investors.
Washington, DC (September 13, 2016) – The Fair Arbitration Now coalition sent a letter urging members of the House Financial Services Committee to reject Chair Jeb Hensarling’s (R-Tex.) H.R. 5983, titled the Financial CHOICE Act of 2016, ahead of the bill’s scheduled mark-up Tuesday morning. Contrary to its title, H.R. 5983 would deprive consumers and investors of their choice on how to resolve serious disputes with powerful financial institutions by stripping the Consumer Financial Protection Bureau (CFPB) and the Securities and Exchange Commission (SEC) of authority to restrict the abusive practice of forced arbitration.
Many financial services companies bury forced arbitration clauses in the fine print of their consumer and investor contracts to kick any dispute out of public court. Many forced arbitration clauses also block class action lawsuits. In arbitration, consumer and investor claims are decided by a private firm chosen by the company with few legal protections and a limited ability to appeal an unfavorable decision. Harmed consumers and investors are also often barred from speaking publicly about the company’s wrongdoing, shielding widespread fraud and misconduct from the public eye.
While the SEC has not exercised its authority to restrict or ban forced arbitration at this time, the CFPB recently proposed a rule to restore consumers’ right to join together in class actions. Particularly just one week after the CFPB fined Wells Fargo a record $100 million for committing massive fraud against its customers – whose claims against the bank have been kicked out of court due to forced arbitration – H.R. 5983 would undermine the purpose of Wall Street Reform by aiding and abetting reckless corporate behavior.