Bill Overview
Title: Arbitration Fairness for Consumers Act
Description: This bill deems as invalid or unenforceable a predispute arbitration agreement or joint-action waiver related to a consumer financial product or service.
Sponsors: Sen. Brown, Sherrod [D-OH]
Target Audience
Population: Global consumers with financial products agreements
Estimated Size: 200000000
- A predispute arbitration agreement typically refers to clauses within contracts that require parties to resolve disputes through arbitration rather than courts.
- Consumer financial products and services range widely, such as credit cards, banking services, loans, and mortgages.
- This bill will impact anyone currently holding or entering into such agreements related to consumer financial products, making their right to legal recourse clearer and potentially altering how disputes are resolved.
- Global adult population involved in consumer financial markets may be impacted as this type of arbitration agreement and waiver is common across the financial services industry.
Reasoning
- The target U.S. population is about 200 million people, including anyone with financial agreements that include arbitration clauses. This includes credit card holders, borrowers, and mortgage holders.
- Financial literacy levels vary across this segment; some people might not know they have arbitration clauses in their contracts.
- The wellbeing effects of this policy will depend on awareness and understanding of the rights they regain or clarify, as well as their current arbitration experiences.
- People unlikely to see significant changes include those without any disputes with financial institutions or those unaware of their arbitration clauses.
- Given the budget constraints and the potential large affected population, not everyone will directly feel the benefits immediately.
Simulated Interviews
Graphic Designer (Los Angeles, CA)
Age: 32 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 14/20
Statement of Opinion:
- I didn't even know my credit card had an arbitration clause. Knowing that I can go to court if needed gives me some peace of mind.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Small Business Owner (Houston, TX)
Age: 45 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- I had an issue with my bank before and arbitration felt like I was fighting a giant with no weapons. This policy makes me feel like the playing field is a little more even.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 5 |
Software Engineer (Chicago, IL)
Age: 29 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 15/20
Statement of Opinion:
- It's nice to know that if things go south with my credit cards, I have other options beyond arbitration. Won't affect me unless something happens though.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Retired (New York, NY)
Age: 60 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 10/20
Statement of Opinion:
- I've always kept an eye on the clauses in my agreements. This policy doesn't change much for me, but it's good for justice.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Public School Teacher (Seattle, WA)
Age: 38 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 13/20
Statement of Opinion:
- We needed something like this bill. I've seen families struggle with arbitration. Fair play is crucial, and this moves us in that direction.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
College Student (Miami, FL)
Age: 23 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 20/20
Statement of Opinion:
- I wasn't familiar with arbitration before, and I feel more secure about my rights in case I need them.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Automotive Worker (Detroit, MI)
Age: 50 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 8/20
Statement of Opinion:
- Arbitration was always skewed towards big companies. This bill means I can push back better if there are unfair practices.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 5 |
Nurse (Denver, CO)
Age: 41 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 12/20
Statement of Opinion:
- This gives people more power over their financial fate, which is important in times of economic uncertainty.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 7 |
Freelancer (Phoenix, AZ)
Age: 35 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 14/20
Statement of Opinion:
- Manifesting my financial security goes beyond these rules, but having alternatives to arbitration could come handy if issues arise.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Tech Entrepreneur (San Francisco, CA)
Age: 28 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 8.0 years
Commonness: 11/20
Statement of Opinion:
- It's interesting to see how this might change the startup scene. For consumers, it's definitely empowering and could drive new trust models.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
Cost Estimates
Year 1: $500000000 (Low: $400000000, High: $700000000)
Year 2: $520000000 (Low: $420000000, High: $730000000)
Year 3: $540000000 (Low: $440000000, High: $760000000)
Year 5: $580000000 (Low: $470000000, High: $800000000)
Year 10: $650000000 (Low: $520000000, High: $900000000)
Year 100: $1000000000 (Low: $800000000, High: $1300000000)
Key Considerations
- The legal system may face increased demand, potentially requiring more resources.
- Consumers might benefit from greater legal recourse, although it could be more time-consuming and expensive than arbitration.
- Financial institutions may pass increased costs onto customers through higher fees.