Members of Congress Call on the Consumer Financial Protection Bureau to Issue a Strong Rule to Prohibit Use of Forced Arbitration

Press Release

Today, U.S. Rep. Hank Johnson (D-GA), U.S. Sen. Al Franken (D-MN) and 56 other members of Congress, sent a letter calling on the Consumer Financial Protection Bureau (CFPB) to undertake a rulemaking to prohibit forced arbitration agreements in consumer financial services and products.

On March 10, 2015, the CFPB issued a report finding that more than three in four consumers were unaware of forced arbitration clauses in their contracts; consumers rarely used arbitration on an individualized basis; and that there is no evidence that forced arbitration lowers costs for consumers.

Forced arbitration clauses are often buried deep within the fine print of financial products and service contracts, harming American consumers by depriving them of their day in court even when companies have violated the law. The letter calls on the CFPB to use its authority under the Dodd-Frank Act to issue strong rules to prohibit the use of forced arbitration clauses in financial contracts and give consumers a meaningful choice after disputes arise.

"Through a well-documented pattern of exploitation, forced arbitration has whittled away at the vital statutory protections for countless employees and consumers against discrimination, predatory lending, and other critical areas of consumer financial protection," said Johnson, who has introduced the Arbitration Fairness Act every Congress since the 110th Congress. "The CFPB has already found that forced arbitration clauses in financial services contracts burden consumers and block access to the courts. It is vital that the CFPB continue its important work by ending forced arbitration in consumer products and services."

Rep. John Conyers, ranking member of the House Judiciary Committee said: "The CFPB's recent report highlights the harmful impact of forced arbitration on millions of American consumers and the economy, exposing how corporations have used forced arbitration to protect themselves from their legal responsibilities with regard to consumer rights. Given the outcome of this comprehensive report, I strongly urge the CFPB to apply their authority to prohibit this practice."

"I commend the CFPB for completing its important study of the use of forced arbitration agreements in financial services contracts," said Rep. Maxine Waters, ranking member of the House Committee on Financial Services. "The CFPB study, which was required under the Dodd-Frank Act, confirmed what we already suspected: that arbitration agreements significantly restrict consumers' relief for disputes with financial services providers and protection is needed for consumers entering into non-mortgage financial agreements. Now that we have the facts, it is imperative that the CFPB quickly issue a rule that eliminates these harmful provisions from our financial services agreements and that restores consumers' legal right to access to our courts."

Rep. Keith Ellison, a member of the House Financial Services Committee and co-chair of the Congressional Progressive Caucus, said: "Forced arbitration clauses take away a consumer's right to hold businesses accountable in court, which hurts consumers and markets. Armed with new data proving forced arbitration clauses are bad for consumers, the CFPB should use their authority to ban them."