Finance

Dems warn consumers are losing right to sue

Greg Nash

Democrats are calling on regulators to protect consumers’ right to settle disputes with companies in court.

Sen. Al Franken (D-Minn.) and Rep. Hank Johnson (D-Ga.) joined legal experts with the American Association for Justice on Monday to highlight a New York Times investigation that found more and more companies are stripping consumers of the ability to file class-action lawsuits.

{mosads}According to the Times report, companies have devised a way to circumvent the courts through arbitration clauses. 

The clauses typically state that disputes about a product can only be resolved by privately appointed individuals or arbitrators, rather than through the court system, and bar consumers from bringing group claims through the arbitration process.

“Forced arbitration is not voluntary, it’s not just and it’s not fair,” Johnson said in a call with reporters Monday. “Simply put, it’s not American.”

The Consumer Financial Protection Bureau announced last month it’s considering proposing rules to keep consumer financial companies from being able to block consumers from bringing class action lawsuits, but advocates said the agency should do more to protect consumers.

“These dishonest agreements force consumers to unknowingly give away their rights,” said Linda Lipsen, CEO of the American Association for Justice. “Arbitrators are not required to follow the law and their decisions are almost impossible to appeal.”

Franken introduced the Arbitration Fairness Act earlier this year but on Monday said he’s had trouble getting Republican support.

The legislation would make arbitration agreements unenforceable in employment, consumer, antitrust or civil rights disputes. Johnson introduced companion legislation in the House, but neither bill has yet to make it out of committee.

House lawmakers have instead moved forward with legislation from Rep. Bob Goodlatte (R-Va.) to set new limits on class action lawsuits. 

The Fairness in Class Action Litigation Act of 2015, which passed the House Judiciary committee by a 15-10 vote in June, would require there to be proof that each proposed member of a class action lawsuit was injured to the same extent as the person named as the class representative before a federal court can certify a class.

But Johnson isn’t too concerned. In order to pass the House, the bill has to first get to the floor of a vote, which he said seems unlikely given the current climate. 

“The House is caught up in gridlock right now,” he said. “I don’t expect much to pass out of this session of Congress except for some weak form of criminal justice reform.” 

Tags Al Franken Arbitration Arbitration clause Arbitration in the United States Bob Goodlatte Business law class action Consumer arbitration Consumer Financial Protection Bureau Contract law

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