WASHINGTON – Nearly eight years after launching a legislative assault on binding arbitration clauses buried in service and employment contracts, U.S. Sen. Al Franken, D-Minn., sees unprecedented progress on a pet peeve.
The ubiquitous fine print clauses that allow company-appointed arbitrators rather than courts to determine the fate of aggrieved customers and employees have been a long-running target for Franken.
Now, a rare high-profile trifecta of current events has thrust the issue into the national spotlight.
First, the Consumer Finance Protection Bureau (CFPB) is poised to let consumers of financial services pursue complaints in class-action suits previously prohibited by arbitration clauses.
Second, the federal Centers for Medicare and Medicaid Services (CMS) just stopped long-term care facilities from forcing Medicare and Medicaid patients to sign residential agreements with arbitration clauses before they move in.
Third, news surfaced that Wells Fargo Bank applied arbitration clauses to customers hurt by unauthorized checking and credit card accounts created by bank employees, a move that will lead to a bill to ban Wells Fargo from using the practice when the Senate returns from its electoral recess in November. This month, the unauthorized account scandal cost Wells Fargo CEO and Minnesota native John Stumpf his job.
"There's real momentum on this [arbitration] issue," Franken said. "These kinds of examples have a real impact on people."
Franken knows the battle against fine print, "pre-dispute" arbitration clauses is far from over. He has succeeded in getting mandatory arbitration stripped from sexual assault and civil rights claims of government contractors. But the Arbitration Fairness Act he offered in 2011 and 2013, which would have generally invalidated mandatory arbitration agreements as a condition of being hired or offered a service, never made it out of committee.