Cortez Masto Cosponsors Legislation to Ban Forced Arbitration in Financial Contracts
Washington, D.C. – U.S. Senator Catherine Cortez Masto joined U.S. Senator Sherrod Brown (D-Ohio) and other Senate colleagues in introducing the Arbitration Fairness for Consumers Act, legislation to prohibit banks and other financial institutions from using forced arbitration clauses against consumers who want to seek restitution and justice.
“Too often big banks use forced arbitration clauses to trick people into giving up their access to the courts. This bill protects Nevadans from unwittingly signing away their right to seek justice when corporations misbehave. I’ll continue to work to make sure all Americans can get transparent and fair treatment from banks and other financial institutions.”
Financial institutions use arbitration clauses to take away consumers’ constitutional right to pursue a trial by jury or to join a class action lawsuit. Consumers with disputes are forced into private, closed-door arbitration proceedings that are not only inconvenient and costly, but also rarely yield justice for consumers. Such clauses are typically non-negotiable, and companies frequently hide them in fine print agreements that are lengthy and dense.
The Arbitration Fairness for Consumers Act bans these unfair practices. The Act amends Title X of the Consumer Financial Protection Act of 2010 to prohibit pre-dispute arbitration agreements and class-action waivers in contracts for consumer financial products or services. Under the Act, such agreements would be neither valid nor enforceable. A one-pager on the bill is available here. The bill text is available here.
Senator Cortez Masto has led efforts to protect consumers throughout her career. She has introduced legislation to protect American consumers who sue corporations for fraud. During the Trump era, she spoke out frequently about his nominees’ efforts to weaken the Consumer Financial Protection Bureau and leave consumers without restitution. In 2020, she helped secure passage of legislation to deter disruptive and potentially harmful phone calls and texts.
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