Archive: May 5, 2015

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Proposed Arbitration Fairness Act Would Ban Pre-Dispute Arbitration Clauses in Consumer Contracts

Proposed Arbitration Fairness Act Would Ban Pre-Dispute Arbitration Clauses in Consumer Contracts

By Andrew C. Glass, Robert W. Sparkes, III, Roger L. Smerage, Eric W. Lee

Two members of Congress are seeking to expand the reach of a federal ban on pre-dispute arbitration agreements to cover nearly all consumer contracts.  The proposed legislation would have a widespread effect, barring the use of pre-dispute arbitration provisions in credit card agreements, auto loan agreements, wireless telephone service contracts, and many other types of consumer-facing agreements that often contain such provisions.

On April 29, 2015, Senator Al Franken (D-Minnesota) and Representative Hank Johnson (D-Georgia) introduced the Arbitration Fairness Act of 2015 (“AFA”) (S. 1133; H.R. 2087).  The proposed legislation would amend the Federal Arbitration Act, 9 U.S.C. §§ 1, et seq. (“FAA”), to prohibit parties from entering into agreements to arbitrate consumer disputes in advance of a dispute arising.  The bar on pre-dispute arbitration agreements would also apply in the context of employer, antitrust, and civil rights disputes.

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