I 

114TH CONGRESS 

2D SESSION H. R. 6423 

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 

DECEMBER 1, 2016 

Mr. SHERMAN (for himself, Mr. CONYERS, Mr. CAPUANO, Ms. JUDY CHU of 

California, Mrs. NAPOLITANO, Ms. EDWARDS, Ms. NORTON, Mr. DANNY

K. DAVIS of Illinois, Mrs. LAWRENCE, Mr. CARTWRIGHT, and Mr. GRIJALVA) 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 2016’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 

8 (1) The Bureau of Consumer Financial Protec9 tion found that Wells Fargo management impleVerDate Sep 11 2014 22:44 Dec 02, 2016 Jkt 069200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H6423.IH H6423

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1 mented sales incentives, including an incentive-com2 pensation program, in part to increase the number 

3 of banking products and services that its employees 

4 sold to its customers. 

5 (2) The Bureau of Consumer Financial Protec6 tion found that Wells Fargo employees engaged in 

7 improper sales practices to satisfy sales goals under 

8 Wells Fargo’s incentive compensation program, in9 cluding opening as many as 1,534,280 checking ac10 counts and 565,443 credit card accounts using con11 sumers’ information without their knowledge or con12 sent between May 2011 and July 2015. 

13 (3) Wells Fargo successfully claimed in Jabbari 

14 v. Wells Fargo that customers had signed away their 

15 rights to hold Wells Fargo accountable in court for 

16 claims of fraud because those customers were bound 

17 to a forced arbitration clause for their legitimate ac18 counts. 

19 (4) After Wells Fargo publicly entered a settle20 ment with Federal regulators for the opening of 

21 thousands of unauthorized customer accounts, Wells 

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

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

24 forced into arbitration. 


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1 (5) Several courts have determined that despite 

2 claims of fraud over unauthorized accounts opened 

3 without customer knowledge or consent, those cus4 tomers are still bound by contracts forcing those 

5 claims into arbitration based on the courts’ interpre6 tation of the Federal Arbitration Act. 

7 (6) The Federal Arbitration Act (now codified 

8 as chapter 1 of title 9, United States Code) was in9 tended to apply to disputes between commercial enti10 ties of generally similar sophistication and bar11 gaining power, but a series of decisions by the Su12 preme Court of the United States have interpreted 

13 the Federal Arbitration Act as applicable to claims 

14 of fraud. 

15 (7) Consumers have no meaningful choice 

16 whether to submit their claims to arbitration and 

17 are typically unaware that they have given up their 

18 rights to file claims in court. 

19 SEC. 3. ARBITRATION OF CONSUMER DISPUTES RELATED 

20 TO CREDIT CARD ACCOUNTS. 

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

22 1631 et seq.) is amended by adding at the end the fol23 lowing (and the table of contents for such chapter is con24 formed accordingly): 


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1 ‘‘§ 140B. Validity and enforceability 

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

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

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

5 and 

6 ‘‘(2) the term ‘predispute arbitration agree7 ment’ means any agreement between a person and 

8 a consumer providing for arbitration of any future 

9 dispute between the parties. 

10 ‘‘(b) VALIDITY AND ENFORCEABILITY.—No predis11 pute arbitration agreement shall be valid or enforceable 

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

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

14 that credit card account. 

15 ‘‘(c) APPLICABILITY.—The applicability of this sec16 tion to a predispute arbitration agreement shall be deter17 mined by a State or Federal court of competent jurisdic18 tion.’’. 

19 SEC. 4. ARBITRATION OF CONSUMER DISPUTES RELATED 

20 TO COVERED ACCOUNTS. 

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

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

23 U.S.C. 1693o–2) the following: 

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

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

26 ‘‘(1) the term ‘covered account’— 


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1 ‘‘(A) means a demand deposit, savings de2 posit, or other asset account (other than an oc3 casional or incidental credit balance in an open 

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

5 described in regulations of the Bureau, estab6 lished primarily for personal, family, or house7 hold purposes, including demand accounts, time 

8 accounts, negotiable order of withdrawal ac9 counts, and share draft accounts; and 

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

11 a financial institution pursuant to a bona fide 

12 trust agreement; 

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

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

15 and 

16 ‘‘(3) the term ‘predispute arbitration agree17 ment’ means any agreement between a financial in18 stitution and a consumer providing for arbitration of 

19 any future dispute between the parties. 

20 ‘‘(b) VALIDITY AND ENFORCEABILITY.—No predis21 pute arbitration agreement shall be valid or enforceable 

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

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

24 for that covered account. 


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1 ‘‘(c) APPLICABILITY.—The applicability of this sec2 tion to a predispute arbitration agreement shall be deter3 mined by a State or Federal court of competent jurisdic4 tion.’’. 

5 SEC. 5. RULE OF CONSTRUCTION. 

6 Nothing in the amendments made by this Act shall 

7 be construed— 

8 (1) to authorize the imposition of a requirement 

9 to submit a dispute to arbitration; or 

10 (2) to restrict any court from ruling that a re11 quirement to submit a dispute to arbitration is in12 valid or unenforceable. 

Æ 


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