Arbitration Fairness for Consumers Act

II 116TH CONGRESS 1ST SESSION S. 630 To amend the Consumer Financial Protection Act of 2010 with respect to arbitration. IN THE SENATE OF THE UNITED STATES FEBRUARY 28, 2019 Mr. BROWN introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Consumer Financial Protection Act of 2010 with respect to arbitration. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Arbitration Fairness 4 for Consumers Act’’. 5 SEC. 2. PURPOSES. 6 The purposes of this Act are to— 7 (1) prohibit predispute arbitration agreements 8 that force arbitration of future consumer financial 9 product or service dispute; and 10 VerDate Sep 11 2014 23:01 Mar 07, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S630.IS S630 kjohnson on DSK79L0C42 with BILLS 2 •S 630 IS (2) prohibit agreements and practices that 1 interfere with the right of individuals and small 2 businesses to participate in a joint, class, or collec- 3 tive action related to a consumer financial product 4 or service dispute. 5 SEC. 3. NO VALIDITY OR ENFORCEABILITY OF PREDISPUTE 6 ARBITRATION AGREEMENTS OR JOINT-AC- 7 TION WAIVERS. 8 (a) IN GENERAL.—Subtitle C of the Consumer Fi- 9 nancial Protection Act of 2010 (12 U.S.C. 5531 et seq.) 10 is amended by inserting after section 1036 (15 U.S.C. 11 5536) the following: 12 ‘‘SEC. 1036A. NO VALIDITY OR ENFORCEABILITY OF 13 PREDISPUTE ARBITRATION AGREEMENTS OR 14 JOINT-ACTION WAIVERS. 15 ‘‘(a) DEFINITIONS.—In this section: 16 ‘‘(1) CLASS ACTION.—The term ‘class action’ 17 means a lawsuit in which 1 or more parties seek or 18 obtain class treatment pursuant to rule 23 of the 19 Federal Rules of Civil Procedure or comparable rule 20 or provision of State law. 21 ‘‘(2) CONSUMER DISPUTE.—The term ‘con- 22 sumer dispute’ means a dispute between— 23 ‘‘(A) an individual, including an individual 24 who seeks certification as a class under rule 23 25 VerDate Sep 11 2014 23:01 Mar 07, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S630.IS S630 kjohnson on DSK79L0C42 with BILLS 3 •S 630 IS of the Federal Rules of Civil Procedure or a 1 comparable rule or provision of State law, who 2 for personal, family, or household purposes, 3 seeks or acquires— 4 ‘‘(i) real or personal property; 5 ‘‘(ii) services, including services re- 6 lated to digital technology; 7 ‘‘(iii) securities or other investments; 8 ‘‘(iv) money; or 9 ‘‘(v) credit; and 10 ‘‘(B) the seller or provider of such prop- 11 erty, services, securities or other investments, 12 money, or credit, including a third party in- 13 volved in the selling, providing of, payment for, 14 receipt or use of information about, or other re- 15 lationship to any such property, services, securi- 16 ties or other investments, money, or credit. 17 ‘‘(3) PREDISPUTE ARBITRATION AGREEMENT.— 18 The term ‘predispute arbitration agreement’ means 19 an agreement to arbitrate a dispute that has not yet 20 arisen at the time of the making of the agreement. 21 ‘‘(4) PRE-DISPUTE JOINT-ACTION WAIVER.— 22 The term ‘pre-dispute joint-action waiver’ means an 23 agreement, whether or not part of a predispute arbi- 24 tration agreement, that would prohibit, or waive the 25 VerDate Sep 11 2014 23:01 Mar 07, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S630.IS S630 kjohnson on DSK79L0C42 with BILLS 4 •S 630 IS right of, one of the parties to the agreement to par- 1 ticipate in a joint, class, or collective action in a ju- 2 dicial, arbitral, administrative, or other forum, con- 3 cerning a dispute that has not yet arisen at the time 4 of the making of the agreement. 5 ‘‘(b) NO VALIDITY OR ENFORCEABILITY OF 6 PREDISPUTE ARBITRATION AGREEMENTS OR JOINT-AC- 7 TION WAIVERS.— 8 ‘‘(1) IN GENERAL.—Notwithstanding any other 9 provision of law, no predispute arbitration agree- 10 ment or predispute joint-action waiver shall be valid 11 or enforceable with respect to a consumer dispute 12 between a covered person and a consumer that re- 13 lates to a consumer financial product or service. 14 ‘‘(2) APPLICABILITY.—An issue as to whether 15 this section applies with respect to a dispute shall be 16 determined under Federal law. The applicability of 17 this chapter to an agreement to arbitrate and the 18 validity and enforceability of an agreement to which 19 this section applies shall be determined by a court, 20 rather than an arbitrator, irrespective of whether the 21 party resisting arbitration challenges the arbitration 22 agreement specifically or in conjunction with other 23 terms of the contract containing the agreement, and 24 VerDate Sep 11 2014 23:01 Mar 07, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S630.IS S630 kjohnson on DSK79L0C42 with BILLS 5 •S 630 IS irrespective of whether the agreement purports to 1 delegate such determinations to an arbitrator.’’. 2 (b) TECHNICAL AND CONFORMING AMENDMENTS.— 3 The table of contents for the Dodd-Frank Wall Street Re- 4 form and Consumer Protection Act is amended by insert- 5 ing after the item relating to section 1036 the following: 6 ‘‘1036A. No validity or enforceability of predispute arbitration agreements or joint-action waivers.’’. SEC. 4. APPLICABILITY. 7 This Act, and the amendments made by this Act, 8 shall apply with respect to any dispute or claim that arises 9 or accrues on or after the date of enactment of this Act. 10 Æ VerDate Sep 11 2014 23:01 Mar 07, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\S630.IS S630 kjohnson on DSK79L0C42 with BILLS