II 114th CONGRESS 2d Session S. 3491 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. Short title This Act may be cited as the Justice for Victims of Fraud Act of 2016 . 2. Findings Congress finds that— (1) the Bureau of Consumer Financial Protection found that Wells Fargo management implemented sales incentives, including an incentive compensation program, in part to increase the number of banking products and services that its employees sold to its customers; (2) the Bureau of Consumer Financial Protection found that Wells Fargo employees engaged in improper sales practices to satisfy sales goals under an incentive compensation program of Wells Fargo, including opening as many as 1,534,280 checking accounts and 565,443 credit card accounts using information of consumers without their knowledge or consent between May 2011 and July 2015; (3) Wells Fargo successfully claimed in Jabbari v. Wells Fargo & Co., No. 15–cv–02159–VC (N.D. Cal. Sept. 23, 2015), that customers had signed away their rights to hold Wells Fargo accountable in court for claims of fraud because those customers were bound to a forced arbitration clause for their legitimate accounts; (4) after Wells Fargo publicly entered a settlement with Federal regulators for the opening of thousands of unauthorized customer accounts, Wells Fargo claimed in Mitchell v. Wells Fargo Bank N.A., No. 16–00966 (D. Utah complaint filed Sept. 16, 2016), that the fraud claims of customers must continue to be forced into arbitration; (5) several courts have determined that despite claims of fraud over unauthorized accounts opened without customer knowledge or consent, those customers are still bound by contracts forcing those claims into arbitration based on the interpretation of courts of title 9, United States Code; (6) the United States Arbitration Act (43 Stat. 883, ch. 213) (codified at title 9, United States Code) was intended to apply to disputes between commercial entities of generally similar sophistication and bargaining power, but a series of decisions by the Supreme Court of the United States has interpreted title 9, United States Code, to apply to claims of fraud; and (7) consumers have no meaningful choice whether to submit their claims to arbitration and are typically unaware that they have given up their rights to file claims in court. 3. Arbitration of consumer disputes related to credit card accounts Chapter 2 of the Truth in Lending Act ( 15 U.S.C. 1631 et seq. ) is amended by adding at the end the following: 140B. Validity and enforceability (a) Definitions In this section— (1) the term covered dispute means a dispute that is not subject to a final judgment by a court; and (2) the term predispute arbitration agreement means any agreement between a person and a consumer providing for arbitration of any future dispute between the parties. (b) Validity and enforceability No pre­dis­pute arbitration agreement shall be valid or enforceable in a covered dispute that is related to a credit card that was not issued in response to a request or application for that credit card account. (c) Applicability The applicability of this section to a predispute arbitration agreement shall be determined by a State or Federal court of competent jurisdiction. . 4. Arbitration of consumer disputes related to covered accounts The Electronic Fund Transfer Act ( 15 U.S.C. 1693 et seq. ) is amended by inserting after section 920 ( 15 U.S.C. 1693o–2 ) the following: 920A. Validity and enforceability (a) Definitions In this section— (1) the term covered account — (A) means a demand deposit, savings deposit, or other asset account (other than an occasional or incidental credit balance in an open end credit plan as defined in section 103(i)), as described in regulations of the Bureau, established primarily for personal, family, or household purposes, including demand accounts, time accounts, negotiable order of withdrawal accounts, and share draft accounts; and (B) does not include an account held by a financial institution pursuant to a bona fide trust agreement; (2) the term covered dispute means a dispute that is not subject to a final judgment by a court; and (3) the term predispute arbitration agreement means any agreement between a financial institution and a consumer providing for arbitration of any future dispute between the parties. (b) Validity and enforceability No pre­dis­pute arbitration agreement shall be valid or enforceable in a covered dispute that is related to a covered account that was not issued in response to a request or application for that covered account. (c) Applicability The applicability of this section to a predispute arbitration agreement shall be determined by a State or Federal court of competent jurisdiction. . 5. Rule of construction Nothing in the amendments made by this Act shall be construed— (1) to authorize the imposition of a requirement to submit a dispute to arbitration; or (2) to restrict any court from ruling that a requirement to submit a dispute to arbitration is invalid or unenforceable.