I

106TH CONGRESS

1ST SESSION H. R. 2258

To treat arbitration clauses which are unilaterally imposed on consumers

as an unfair and deceptive trade practice and prohibit their use in

consumer transactions, and for other purposes

IN THE HOUSE OF REPRESENTATIVES

JUNE 17, 1999

Mr. GUTIERREZ (for himself, Mr. VENTO, Mr. KUCINICH, Mr. BROWN of California, Ms. EDDIE BERNICE JOHNSON of Texas, and Mrs.

CHRISTENSEN) introduced the following bill; which was referred to the

Committee on Banking and Financial Services

A BILL

To treat arbitration clauses which are unilaterally imposed

on consumers as an unfair and deceptive trade practice

and prohibit their use in consumer transactions, and

for other purposes

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 ‘‘Consumer Fairness

5 Act of 1999’’.
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1 SEC. 2. PROHIBITION ON ARBITRATION CLAUSES IMPOSED

2 ON CONSUMERS WITHOUT THEIR CONSENT.

3 (a) IN GENERAL.—The Consumer Credit Protection

4 Act (15 U.S.C. 1601 et seq.) is amended by adding at

5 the end the following:

6 ‘‘TITLE X—DISPUTE

7 RESOLUTION

8 ‘‘SEC. 1001. SHORT TITLE; TABLE OF CONTENTS

9 ‘‘(a) SHORT TITLE.—This title may be cited as the

10 ‘‘Consumer Fairness Act’’.

11 ‘‘(b) TABLE OF CONTENTS.—The table of contents

12 for this title is as follows:

‘‘TITLE X—DISPUTE RESOLUTION

‘‘Sec. 1001. Short title; table of contents

‘‘Sec. 1002. Definitions.

‘‘Sec. 1003. Prohibition on arbitration clauses imposed on consumers without their consent.

13 ‘‘SEC. 1002. DEFINITIONS.

14 ‘‘For purposes of this title, the following definitions

15 shall apply:

16 ‘‘(1) CONSUMER.—The term ‘‘consumer’’

17 means any individual.

18 ‘‘(2) CONSUMER TRANSACTION.—The term

19 ‘consumer transaction’ means the sale or rental of

20 goods, services, or real property, including an exten21 sion of credit or the provision of any other financial

22 product or service, to an individual in a transaction
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1 entered into primarily for personal, family, or house2 hold purposes.

3 ‘‘(3) CONSUMER CONTRACT.—The term ‘con4 sumer contract’ means any written, standardized

5 form contract between the parties to a consumer

6 transaction.

7 ‘‘SEC. 1003. PROHIBITION ON ARBITRATION CLAUSES IM8 POSED ON CONSUMERS WITHOUT THEIR

9 CONSENT.

10 ‘‘(a) IN GENERAL.—A written provision in any con11 sumer transaction or consumer contract which requires

12 binding arbitration (whether by the terms of such trans13 action or contract directly or at the request of any party

14 to the transaction or contract) to resolve any controversy

15 arising out of or related to the transaction or contract,

16 or the failure to perform the whole or any part of the

17 transaction or contract shall constitute a violation of this

18 title, shall not be enforceable, and shall be treated as an

19 unfair and deceptive trade act or practice under Federal

20 or State law.

21 ‘‘(b) POST-CONTROVERSY AGREEMENTS.—Sub22 section (a) shall not apply with respect to a written agree23 ment to determine by binding arbitration an existing con24 troversy arising out of a consumer transaction or con25 sumer contract if the written agreement has been entered
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1 into by the parties to the consumer transaction or con2 sumer contract after the controversy has arisen.

3 ‘‘(c) COMPLIANCE.—Compliance with the require4 ments of this title shall be enforced in the same manner

5 as compliance with the requirements imposed under the

6 preceding title are enforced under section 917 of such

7 title.

8 ‘‘(d) COORDINATION WITH OTHER LAW.—No provi9 sion of this section shall be construed as annulling, alter10 ing, affecting, or superseding any Federal law, or the laws

11 of any State, relating to arbitration in connection with

12 consumer transactions or consumer contracts, except to

13 the extent that those laws are inconsistent with the provi14 sions of this section, and then only to the extent of the

15 inconsistency.’’.

16 (b) APPLICABILITY.—The amendments made by this

17 section shall apply to all consumer transactions and con18 sumer contracts entered into on, or after the date of the

19 enactment of this Act, amendments entered into on or

20 after such date of enactment to any consumer transaction

21 or consumer contract without regard to the date such

22 transaction was consummated or such contract entered

23 into, and to all controversies pending or filed on, or arising

24 after, the date of such date of enactment.

Æ