Congressman Johnson, Senator Warren Urge Consumer Financial Protection Bureau To Address Forced Arbitration in Financial Products, Services

Members send bicameral letter to CFPB seeking to level the playing field for consumers, workers against corporate greed in financial services contracts

WASHINGTON, D.C. – U.S. Rep. Hank Johnson (D-GA) joined U.S. Sen. Elizabeth Warren (MA) in leading a letter from Congress to the Consumer Financial Protection Bureau urging it to address forced arbitration clauses in financial products and services to protect consumers, our nation’s servicemembers and other vulnerable, unsuspecting groups from these deceptive practices.

“Beyond all doubt, forced arbitration creates a discriminatory and unjust system that pales in comparison to the courts,” said Congressman Johnson, who since 2007 has introduced the Fair Arbitration Injustice Repeal Act or FAIR Act that would eliminate forced arbitration clauses in employment, consumer, and civil rights cases, and would allow consumers and workers to choose arbitration after a dispute occurred. 

“Since the CFPB’s founding 12 years ago, the Bureau has worked tirelessly to protect American consumers, by holding repeat offenders accountable through hundreds of enforcement actions, launching efforts to save Americans billions of dollars in junk fees, and partnering with other agencies to ensure that new technologies comply with existing consumer protection laws. Unfortunately, many regulations and laws intended to protect consumers continue to be undermined and rendered meaningless by provisions jammed into fine print, such as forced arbitration clauses. Though Congress has limited the use of forced arbitration for certain sectors and cases, the Bureau is best positioned to issue a rulemaking on forced arbitration for financial products and services,” wrote the lawmakers.

Companies hide forced arbitration clauses in the fine print, take-it-or-leave-it terms accompanying many financial products and services. These fine print traps prohibit consumers from accessing the civil justice system to resolve disputes with financial services companies. Instead, consumers are forced into a non-transparent, private system in which their position is inherently unequal relative to the company. In such an unfair playing field, with no ability to appeal decisions, it is no surprise that consumers rarely prevail over financial services providers. 

Studies on forced arbitration released after 2017 show that consumers who are Black, indigenous, people of color (BIPOC) or female are more likely than white men to be forced into arbitration. But the facts is that all consumers are trapped in these forced arbitration clauses. Almost everyone has signed a contract with these provisions – such as buying a cell phone, signing up for a credit card or signing an employment contract – but people don’t even realize it.

Read the full letter HERE.

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