Scales of justice (Image: Shutterstock)

The full House passed Friday the Forced Arbitration Injustice Repeal Act (FAIR) Act, HR 1423, to end forced arbitration.

The bill, which passed by a 225–186 vote, prohibits predispute arbitration agreements that require arbitration of future employment, consumer, antitrust or civil rights disputes, as well as allows individuals, workers and small businesses to bring joint, class or collective action in these disputes.

Micah Hauptman, financial services counsel for the Consumer Federation of America, said in a statement after the vote that passage of the FAIR Act is “a win for investors. Currently, investors are forced into arbitration when they have a dispute with their brokers, where the deck is often stacked against them.”

In addition, Hauptman said, “there’s a new campaign to allow corporations to force shareholders into arbitration in order to immunize company management from being held accountable for fraud. The FAIR Act would ensure that investors get the choice to take their brokers and corporate wrongdoers to court, where investors have a fighting chance.”

Mandatory arbitration “allows large corporations to systematically evade accountability when they break the law,” added American Association for Justice CEO Linda Lipsen, in a separate statement. “When this bill passes both houses of Congress, corporations will no longer be allowed to immunize themselves and silence employees, consumers, nursing home residents, sexual assault survivors and victims of financial fraud.”

Both groups urged the Senate to take up legislation.

“We now call on the Senate to take up the measure,” stated Rachel Weintraub, the Consumer Federation’s legislative director and general counsel. “Without this action, the number of forced arbitration clauses in effect in the U.S. will only grow. Americans who overwhelmingly support banning forced arbitration should not wait any longer for the elimination of these clauses and the restoration of their rights.”