I
107TH CONGRESS
2D SESSION
H. R. 5162
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
JULY 18, 2002
Mr. GUTIERREZ introduced the following bill; which was referred to the
Committee on 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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Consumer Fairness
Act of 2002’’.
SEC. 2. PROHIBITION ON ARBITRATION CLAUSES IMPOSED
ON CONSUMERS WITHOUT THEIR CONSENT.
(a) IN GENERAL.—The Consumer Credit Protection
Act (15 U.S.C. 1601 et seq.) is amended by adding at
the end the following new title:
‘‘TITLE X—DISPUTE
RESOLUTION
‘‘SEC. 1001. SHORT TITLE; TABLE OF CONTENTS
‘‘(a) SHORT TITLE.—This title may be cited as the
‘Consumer Fairness Act’.
‘‘(b) TABLE OF CONTENTS.—The table of contents
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 with-
out their consent.
‘‘SEC. 1002. DEFINITIONS.
‘‘For purposes of this title, the following definitions
shall apply:
‘‘(1) CONSUMER.—The term ‘consumer’ means
any individual.
‘‘(2) CONSUMER
TRANSACTION.—The term
‘consumer transaction’ means the sale or rental of
goods, services, or real property, including an exten-
sion of credit or the provision of any other financial
product or service, to an individual in a transaction
entered into primarily for personal, family, or house-
hold purposes.
‘‘(3) CONSUMER
CONTRACT.—The term ‘con-
sumer contract’ means any written, standardized
form contract between the parties to a consumer
transaction.
‘‘SEC. 1003. PROHIBITION ON ARBITRATION CLAUSES IM-
POSED ON CONSUMERS WITHOUT THEIR
CONSENT.
‘‘(a) IN GENERAL.—A written provision in any con-
sumer transaction or consumer contract which requires
binding arbitration (whether by the terms of such trans-
action or contract directly or at the request of any party
to the transaction or contract) to resolve any controversy
arising out of or related to the transaction or contract,
or the failure to perform the whole or any part of the
transaction or contract shall constitute a violation of this
title, shall not be enforceable, and shall be treated as an
unfair and deceptive trade act or practice under Federal
or State law.
‘‘(b) 
POST-CONTROVERSY
AGREEMENTS.—Sub-
section (a) shall not apply with respect to a written agree-
ment to determine by binding arbitration an existing con-
troversy arising out of a consumer transaction or con-
sumer contract if the written agreement has been entered
into by the parties to the consumer transaction or con-
sumer contract after the controversy has arisen.
‘‘(c) COMPLIANCE.—Compliance with the require-
ments of this title shall be enforced in the same manner
as compliance with the requirements imposed under the
preceding title are enforced under section 917 of such
title.
‘‘(d) COORDINATION WITH OTHER LAW.—No provi-
sion of this section shall be construed as annulling, alter-
ing, affecting, or superseding any Federal law, or the laws
of any State, relating to arbitration in connection with
consumer transactions or consumer contracts, except to
the extent that those laws are inconsistent with the provi-
sions of this section, and then only to the extent of the
inconsistency.’’.
(b) APPLICABILITY.—The amendments made by this
section shall apply to all consumer transactions and con-
sumer contracts entered into on, or after the date of the
enactment of this Act, amendments entered into on or
after such date of enactment to any consumer transaction
or consumer contract without regard to the date such
transaction was consummated or such contract entered
into, and to all controversies pending or filed on, or arising
after, the date of such date of enactment.
Æ