Rep. Johnson highlights Arbitration Fairness Act at Oversight hearing

Rep. Hank Johnson (GA-04) appeared today at the House Subcommittee on Domestic Policy hearing to explain his Arbitration Fairness Act of 2009.

The subcommittee – part of the larger Oversight and Government Reform Committee – met to evaluate whether consumers are getting a raw deal when creditors force them to settle their debt disputes through the forced arbitration system.

The hearing explored whether consumer debt collection arbitration, as currently administered, is fair and legitimate.

Johnson’s Arbitration Fairness Act or H.R. 1020, which he first introduced in 2007, aims to protect consumers from business practices that require them to cede their rights to a jury trial as a condition of service and instead send them through an opaque arbitration process.

Johnson cleared up a common misunderstanding with his legislation after several lawmakers and witnesses at the hearing misinterpreted that H.R. 1020 would “do away with mandatory arbitration procedures.”

“The Arbitration Fairness Act does not forbid arbitration clauses,” said Johnson. “It merely prevents forced pre-dispute arbitration clauses. Consumers may still opt to arbitrate a dispute with a company. But only when that consumer determines that it is the appropriate forum at the time the conflict arises and not before.”

Subcommittee Chairman Dennis Kuchinich recognized Johnson’s hard work on the issue. His staff, which conducted an investigation of the arbitration process in regard to debt collection, concluded that the system “is ripe for abuse, and it has been abused by the largest administrator of ‘consumer arbitrations.’ ”