On Thursday, April 28, 2016, Senators Al Franken (D-Minn.) and Richard Blumenthal (D-Conn.) proposed legislation that would ban arbitration clauses in telecommunication service contracts. The proposed bill, the Justice for Telecommunications Consumers Act of 2016, would invalidate “any agreement to arbitrate a dispute that has not yet arisen at the time of the making of [an] agreement” for mobile phone service, internet services, multichannel programming services, and other telecommunications services offered by a common carrier.
According to Sen. Franken, a longtime opponent of mandatory arbitration provisions, “[f]orced arbitration clauses are often buried in the fine print of agreements we sign each and every day–like cable, Internet, and cell phone contracts–and they strip away rights from the American consumer.” Sen. Franken claimed in a press release that the proposed bill would “reopen the courtroom doors to Americans who have been wronged by giant corporations.”
In addition to the proposed legislation, fourteen senators—led by Senators Franken and Blumenthal—sent an open letter to FCC Chairman Tom Wheeler urging the FCC “to consider the impact of forced arbitration clauses in telecommunications contracts and to use any available tools to secure access to justice for American consumers.” According to the letter, telecommunications customers regularly complain about deceptive advertising and unauthorized fees, but are precluded from seeking relief because of arbitration agreements that frequently include class action waivers. Citing to data from a 2015 New York Times article, the Senators claimed the number of filed consumer arbitration demands is “grossly disproportionate” to the amount of claims that would be brought if consumers had access to the courtroom.
In the letter, the Senators went on to applaud the on-going efforts of other agencies, including the Consumer Financial Protection Bureau (CFPB), to address “the injustice resulting from mandatory arbitration clauses” and invited the FCC to take further action on the issue.
The proposed legislation and letter to the FCC mark the latest steps in a series of actions taken by law makers and agencies to eliminate or limit the use of arbitration agreements. As previously reported, the CFPB is currently considering banning some arbitration agreements that block consumer participation in class action lawsuits in financial services contracts. The CFPB is hosting a field hearing on arbitration in Albuquerque, New Mexico today May 5, 2016 and issued a Notice of Proposed Rulemaking seeking to ban mandatory arbitration clauses in a variety of consumer financial services contracts. The Senators’ actions on April 28th may cause the FCC to consider a similar rulemaking.