II 

114TH CONGRESS 

2D SESSION S. 3491 

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 

DECEMBER 1, 2016 

Mr. BROWN (for himself, Mr. LEAHY, Mr. FRANKEN, Mr. DURBIN, Mr. 

TESTER, Mrs. MURRAY, Mr. MERKLEY, Ms. WARREN, Ms. HIRONO, Mr. 

CASEY, Mr. WARNER, Mr. MENENDEZ, Mr. BLUMENTHAL, Ms. 

HEITKAMP, and Mr. REED) 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. 

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 Congress finds that— 


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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 an incentive compensation program of Wells Fargo, 

11 including opening as many as 1,534,280 checking 

12 accounts and 565,443 credit card accounts using in13 formation of consumers without their knowledge or 

14 consent between May 2011 and July 2015; 

15 (3) Wells Fargo successfully claimed in Jabbari 

16 v. Wells Fargo & Co., No. 15–cv–02159–VC (N.D. 

17 Cal. Sept. 23, 2015), that customers had signed 

18 away their rights to hold Wells Fargo accountable in 

19 court for claims of fraud because those customers 

20 were bound to a forced arbitration clause for their 

21 legitimate accounts; 

22 (4) after Wells Fargo publicly entered a settle23 ment with Federal regulators for the opening of 

24 thousands of unauthorized customer accounts, Wells 

25 Fargo claimed in Mitchell v. Wells Fargo Bank 


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1 N.A., No. 16–00966 (D. Utah complaint filed Sept. 

2 16, 2016), that the fraud claims of customers must 

3 continue to be forced into arbitration; 

4 (5) several courts have determined that despite 

5 claims of fraud over unauthorized accounts opened 

6 without customer knowledge or consent, those cus7 tomers are still bound by contracts forcing those 

8 claims into arbitration based on the interpretation of 

9 courts of title 9, United States Code; 

10 (6) the United States Arbitration Act (43 Stat. 

11 883, ch. 213) (codified at title 9, United States 

12 Code) was intended to apply to disputes between 

13 commercial entities of generally similar sophistica14 tion and bargaining power, but a series of decisions 

15 by the Supreme Court of the United States has in16 terpreted title 9, United States Code, to apply to 

17 claims of fraud; and 

18 (7) consumers have no meaningful choice 

19 whether to submit their claims to arbitration and 

20 are typically unaware that they have given up their 

21 rights to file claims in court. 


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1 SEC. 3. ARBITRATION OF CONSUMER DISPUTES RELATED 

2 TO CREDIT CARD ACCOUNTS. 

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

4 1631 et seq.) is amended by adding at the end the fol5 lowing: 

6 ‘‘§ 140B. Validity and enforceability 

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

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

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

10 and 

11 ‘‘(2) the term ‘predispute arbitration agree12 ment’ means any agreement between a person and 

13 a consumer providing for arbitration of any future 

14 dispute between the parties. 

15 ‘‘(b) VALIDITY AND ENFORCEABILITY.—No predis16 pute arbitration agreement shall be valid or enforceable 

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

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

19 that credit card account. 

20 ‘‘(c) APPLICABILITY.—The applicability of this sec21 tion to a predispute arbitration agreement shall be deter22 mined by a State or Federal court of competent jurisdic23 tion.’’. 


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1 SEC. 4. ARBITRATION OF CONSUMER DISPUTES RELATED 

2 TO COVERED ACCOUNTS. 

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

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

5 U.S.C. 1693o–2) the following: 

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

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

8 ‘‘(1) the term ‘covered account’— 

9 ‘‘(A) means a demand deposit, savings de10 posit, or other asset account (other than an oc11 casional or incidental credit balance in an open 

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

13 described in regulations of the Bureau, estab14 lished primarily for personal, family, or house15 hold purposes, including demand accounts, time 

16 accounts, negotiable order of withdrawal ac17 counts, and share draft accounts; and 

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

19 a financial institution pursuant to a bona fide 

20 trust agreement; 

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

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

23 and 

24 ‘‘(3) the term ‘predispute arbitration agree25 ment’ means any agreement between a financial inVerDate Sep 11 2014 22:44 Dec 02, 2016 Jkt 069200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3491.IS S3491

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1 stitution and a consumer providing for arbitration of 

2 any future dispute between the parties. 

3 ‘‘(b) VALIDITY AND ENFORCEABILITY.—No predis4 pute arbitration agreement shall be valid or enforceable 

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

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

7 for that covered account. 

8 ‘‘(c) APPLICABILITY.—The applicability of this sec9 tion to a predispute arbitration agreement shall be deter10 mined by a State or Federal court of competent jurisdic11 tion.’’. 

12 SEC. 5. RULE OF CONSTRUCTION. 

13 Nothing in the amendments made by this Act shall 

14 be construed— 

15 (1) to authorize the imposition of a requirement 

16 to submit a dispute to arbitration; or 

17 (2) to restrict any court from ruling that a re18 quirement to submit a dispute to arbitration is in19 valid or unenforceable. 

Æ 


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