I 

115TH CONGRESS 

1ST SESSION H. R. 1414 

To amend the Truth in Lending Act and the Electronic Fund Transfer 

Act to provide justice to victims of fraud. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 7, 2017 

Mr. SHERMAN (for himself, Ms. MAXINE WATERS of California, Mr. CONYERS, Mr. JOHNSON of Georgia, Ms. BONAMICI, Mr. COHEN, Mr. CARTWRIGHT, Mr. GRIJALVA, Ms. HANABUSA, Ms. JACKSON LEE, Ms. 

JAYAPAL, Mr. TED LIEU of California, Ms. LOFGREN, Mr. LYNCH, Mr. 

SEAN PATRICK MALONEY of New York, Ms. NORTON, Mr. PAYNE, Mr. 

RASKIN, and Ms. SCHAKOWSKY) introduced the following bill; which was 

referred to the Committee on Financial Services 

A BILL 

To amend the Truth in Lending Act and the Electronic 

Fund Transfer Act to provide justice to victims of fraud. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Justice for Victims 

5 of Fraud Act of 2017’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 


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1 (1) The Bureau of Consumer Financial Protec2 tion found that Wells Fargo management imple3 mented sales incentives, including an incentive-com4 pensation program, in part to increase the number 

5 of banking products and services that its employees 

6 sold to its customers. 

7 (2) The Bureau of Consumer Financial Protec8 tion found that Wells Fargo employees engaged in 

9 improper sales practices to satisfy sales goals under 

10 Wells Fargo’s incentive compensation program, in11 cluding opening as many as 1,534,280 checking ac12 counts and 565,443 credit card accounts using con13 sumers’ information without their knowledge or con14 sent between May 2011 and July 2015. 

15 (3) Wells Fargo successfully claimed in Jabbari 

16 v. Wells Fargo that customers had signed away their 

17 rights to hold Wells Fargo accountable in court for 

18 claims of fraud because those customers were bound 

19 to a forced arbitration clause for their legitimate ac20 counts. 

21 (4) After Wells Fargo publicly entered a settle22 ment with Federal regulators for the opening of 

23 thousands of unauthorized customer accounts, Wells 

24 Fargo claimed in Mitchell et al. v. Wells Fargo et 


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1 al. that customers’ fraud claims must continue to be 

2 forced into arbitration. 

3 (5) Several courts have determined that despite 

4 claims of fraud over unauthorized accounts opened 

5 without customer knowledge or consent, those cus6 tomers are still bound by contracts forcing those 

7 claims into arbitration based on the courts’ interpre8 tation of the Federal Arbitration Act. 

9 (6) The Federal Arbitration Act (now codified 

10 as chapter 1 of title 9, United States Code) was in11 tended to apply to disputes between commercial enti12 ties of generally similar sophistication and bar13 gaining power, but a series of decisions by the Su14 preme Court of the United States have interpreted 

15 the Federal Arbitration Act as applicable to claims 

16 of fraud. 

17 (7) Consumers have no meaningful choice 

18 whether to submit their claims to arbitration and 

19 are typically unaware that they have given up their 

20 rights to file claims in court. 

21 SEC. 3. ARBITRATION OF CONSUMER DISPUTES RELATED 

22 TO CREDIT CARD ACCOUNTS. 

23 Chapter 2 of the Truth in Lending Act (15 U.S.C. 

24 1631 et seq.) is amended by adding at the end the folVerDate Sep 11 2014 23:58 Mar 13, 2017 Jkt 069200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1414.IH H1414

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1 lowing (and the table of contents for such chapter is con2 formed accordingly): 

3 ‘‘§ 140B. Validity and enforceability 

4 ‘‘(a) DEFINITIONS.—In this section— 

5 ‘‘(1) the term ‘covered dispute’ means a dispute 

6 that is not subject to a final judgment by a court; 

7 and 

8 ‘‘(2) the term ‘predispute arbitration agree9 ment’ means any agreement between a person and 

10 a consumer providing for arbitration of any future 

11 dispute between the parties. 

12 ‘‘(b) VALIDITY AND ENFORCEABILITY.—No predis13 pute arbitration agreement shall be valid or enforceable 

14 in a covered dispute that is related to a credit card that 

15 was not issued in response to a request or application for 

16 that credit card account. 

17 ‘‘(c) APPLICABILITY.—The applicability of this sec18 tion to a predispute arbitration agreement shall be deter19 mined by a State or Federal court of competent jurisdic20 tion.’’. 

21 SEC. 4. ARBITRATION OF CONSUMER DISPUTES RELATED 

22 TO COVERED ACCOUNTS. 

23 The Electronic Fund Transfer Act (15 U.S.C. 1693 

24 et seq.) is amended by inserting after section 920 (15 

25 U.S.C. 1693o–2) the following: 


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1 ‘‘SEC. 920A. VALIDITY AND ENFORCEABILITY. 

2 ‘‘(a) DEFINITIONS.—In this section— 

3 ‘‘(1) the term ‘covered account’— 

4 ‘‘(A) means a demand deposit, savings de5 posit, or other asset account (other than an oc6 casional or incidental credit balance in an open 

7 end credit plan as defined in section 103(i)), as 

8 described in regulations of the Bureau, estab9 lished primarily for personal, family, or house10 hold purposes, including demand accounts, time 

11 accounts, negotiable order of withdrawal ac12 counts, and share draft accounts; and 

13 ‘‘(B) does not include an account held by 

14 a financial institution pursuant to a bona fide 

15 trust agreement; 

16 ‘‘(2) the term ‘covered dispute’ means a dispute 

17 that is not subject to a final judgment by a court; 

18 and 

19 ‘‘(3) the term ‘predispute arbitration agree20 ment’ means any agreement between a financial in21 stitution and a consumer providing for arbitration of 

22 any future dispute between the parties. 

23 ‘‘(b) VALIDITY AND ENFORCEABILITY.—No predis24 pute arbitration agreement shall be valid or enforceable 

25 in a covered dispute that is related to a covered account 


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1 that was not issued in response to a request or application 

2 for that covered account. 

3 ‘‘(c) APPLICABILITY.—The applicability of this sec4 tion to a predispute arbitration agreement shall be deter5 mined by a State or Federal court of competent jurisdic6 tion.’’. 

7 SEC. 5. RULE OF CONSTRUCTION. 

8 Nothing in the amendments made by this Act shall 

9 be construed— 

10 (1) to authorize the imposition of a requirement 

11 to submit a dispute to arbitration; or 

12 (2) to restrict any court from ruling that a re13 quirement to submit a dispute to arbitration is in14 valid or unenforceable. 

Æ 


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