Hearing Of The Subcommittee On Commercial And Administrative Law Of The House Committee On The Judiciary - Mandatory Binding Arbitration -- Is It Fair And Voluntary?
Statement
Hearing Of The Subcommittee On Commercial And Administrative Law Of The House Committee On The Judiciary - Mandatory Binding Arbitration -- Is It Fair And Voluntary?
Thank you, Chairman Cohen, for the opportunity to testify today before the
Commercial and Administrative Law Subcommittee. Forced arbitration has been a
concern of mine for many years and I firmly believe that Congress must act in this
instance to protect consumers.
In the 110th Congress, I introduced the Arbitration Fairness Act, a bill that would
prevent all forced pre-dispute arbitration clauses. That bill passed favorably out of this
Subcommittee. I re-introduced my legislation in this Congress, and am proud to have the
Chairman of the Full Judiciary and three other fine members of this Subcommittee as
original cosponsors. In fact, this bipartisan bill already has over 90 cosponsors.
The Arbitration Fairness Act does not forbid arbitration clauses. 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.
As Chairman of the Judiciary Committee Subcommittee on Courts and
Competition Policy, I believe it is vital that consumers continue to have access to the
courts and not be foreclosed from litigation by the constraints of a pre-dispute forced
arbitration clause.
Major arbitration companies, including the National Arbitration Forum and
American Arbitration Association have recognized that the arbitration process, in its
mandatory form, is unfair to consumers. Recently, Bank of America voluntarily dropped
its mandatory arbitration program for credit-card disputes, deposit account disputes and
disputes involved loans for automobiles, recreational vehicles and boats.
These small steps towards eliminating forced arbitration clauses only underscores
the need for Congress to enact my legislation along with Representative Sanchez's
Fairness in Nursing Home Arbitration Act. Pre-dispute forced arbitration agreements are
nearly always the product of unequal bargaining power between the consumer and the
business. The scales of justice ought not to be so weighted.
I recently wrote a letter to the Attorney General of the State of Georgia addressing
the need for close scrutiny of arbitration clauses in home builder contracts. The personal
harm alleged by several of my constituents pertains to just one company's abuse of the
arbitration process. However, the abusive practices that harmed these victims of
arbitration is indicative of a much larger problems where consumers are forced to sign
arbitration clauses that strongly favor the company to the detriment of the consumer.
Arbitration agreements remain in many other consumer, employment, and
franchisee agreements. Congress must act to prohibit forced arbitration before consumers
suffer any more harm.
Again, I thank Chairman Cohen for the opportunity to testify before the
Commercial and Administrative Law Subcommittee today.
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