[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 3491 Introduced in Senate (IS)]

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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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Justice for Victims of Fraud Act of 
2016''.

SEC. 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.

SEC. 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:
``Sec. 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.''.

SEC. 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:

``SEC. 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.''.

SEC. 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.
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