[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 552 Introduced in Senate (IS)]
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115th CONGRESS
1st Session
S. 552
To amend the Truth in Lending Act and the Electronic Fund Transfer Act
to provide justice to victims of fraud.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 7, 2017
Mr. Brown (for himself, Mr. Leahy, Mrs. Murray, Mr. Wyden, Mr. Durbin,
Mr. Reed, Mr. Menendez, Mr. Sanders, Mr. Casey, Mr. Whitehouse, Mr.
Warner, Mr. Merkley, Mr. Franken, Mr. Blumenthal, Mr. Schatz, Ms.
Hirono, Ms. Warren, Ms. Heitkamp, and Mr. Van Hollen) introduced the
following bill; which was read twice and referred to the Committee on
Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To amend the Truth in Lending Act and the Electronic Fund Transfer Act
to provide justice to victims of fraud.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Justice for Victims of Fraud Act of
2017''.
SEC. 2. FINDINGS.
Congress finds that--
(1) the Bureau of Consumer Financial Protection found that
Wells Fargo management implemented sales incentives, including
an incentive compensation program, in part to increase the
number of banking products and services that its employees sold
to its customers;
(2) the Bureau of Consumer Financial Protection found that
Wells Fargo employees engaged in improper sales practices to
satisfy sales goals under an incentive compensation program of
Wells Fargo, including opening as many as 1,534,280 checking
accounts and 565,443 credit card accounts using information of
consumers without their knowledge or consent between May 2011
and July 2015;
(3) Wells Fargo successfully claimed in Jabbari v. Wells
Fargo & Co., No. 15-cv-02159-VC (N.D. Cal. Sept. 23, 2015) that
customers had signed away their rights to hold Wells Fargo
accountable in court for claims of fraud because those
customers were bound to a forced arbitration clause for their
legitimate accounts;
(4) after Wells Fargo publicly entered a settlement with
Federal regulators for the opening of thousands of unauthorized
customer accounts, Wells Fargo claimed in Mitchell v. Wells
Fargo Bank N.A., No. 16-00966 (D. Utah complaint filed Sept.
16, 2016) that the fraud claims of customers must continue to
be forced into arbitration;
(5) several courts have determined that despite claims of
fraud over unauthorized accounts opened without customer
knowledge or consent, those customers are still bound by
contracts forcing those claims into arbitration based on the
interpretation of courts of title 9, United States Code;
(6) the United States Arbitration Act (43 Stat. 883, ch.
213) (codified at title 9, United States Code) was intended to
apply to disputes between commercial entities of generally
similar sophistication and bargaining power, but a series of
decisions by the Supreme Court of the United States has
interpreted title 9, United States Code, to apply to claims of
fraud; and
(7) consumers have no meaningful choice whether to submit
their claims to arbitration and are typically unaware that they
have given up their rights to file claims in court.
SEC. 3. ARBITRATION OF CONSUMER DISPUTES RELATED TO CREDIT CARD
ACCOUNTS.
Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is
amended by adding at the end the following:
``Sec. 140B. Validity and enforceability
``(a) Definitions.--In this section--
``(1) the term `covered dispute' means a dispute that is
not subject to a final judgment by a court; and
``(2) the term `predispute arbitration agreement' means any
agreement between a person and a consumer providing for
arbitration of any future dispute between the parties.
``(b) Validity and Enforceability.--No predispute arbitration
agreement shall be valid or enforceable in a covered dispute that is
related to a credit card that was not issued in response to a request
or application for that credit card account.
``(c) Applicability.--The applicability of this section to a
predispute arbitration agreement shall be determined by a State or
Federal court of competent jurisdiction.''.
SEC. 4. ARBITRATION OF CONSUMER DISPUTES RELATED TO COVERED ACCOUNTS.
The Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.) is
amended by inserting after section 920 (15 U.S.C. 1693o-2) the
following:
``SEC. 920A. VALIDITY AND ENFORCEABILITY.
``(a) Definitions.--In this section--
``(1) the term `covered account'--
``(A) means a demand deposit, savings deposit, or
other asset account (other than an occasional or
incidental credit balance in an open end credit plan as
defined in section 103(i)), as described in regulations
of the Bureau, established primarily for personal,
family, or household purposes, including demand
accounts, time accounts, negotiable order of withdrawal
accounts, and share draft accounts; and
``(B) does not include an account held by a
financial institution pursuant to a bona fide trust
agreement;
``(2) the term `covered dispute' means a dispute that is
not subject to a final judgment by a court; and
``(3) the term `predispute arbitration agreement' means any
agreement between a financial institution and a consumer
providing for arbitration of any future dispute between the
parties.
``(b) Validity and Enforceability.--No predispute arbitration
agreement shall be valid or enforceable in a covered dispute that is
related to a covered account that was not issued in response to a
request or application for that covered account.
``(c) Applicability.--The applicability of this section to a
predispute arbitration agreement shall be determined by a State or
Federal court of competent jurisdiction.''.
SEC. 5. RULE OF CONSTRUCTION.
Nothing in the amendments made by this Act shall be construed--
(1) to authorize the imposition of a requirement to submit
a dispute to arbitration; or
(2) to restrict any court from ruling that a requirement to
submit a dispute to arbitration is invalid or unenforceable.
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