View or download a PDF of the letter here.

November 15, 2021 

Senator Chuck Schumer
Majority Leader
United States Senate
Washington, DC 20510 

Senator Mitch McConnell
Minority Leader
United States Senate
Washington, DC 20510 

Senator Jack Reed, Chairman
U.S. Senate Committee on Armed Services
Russell Senate Building
Washington, DC 20510 

Senator James Inhofe, Ranking Member
U.S. Senate Committee on Armed Services
Russell Senate Building
Washington, DC 20510 

Dear Leader Schumer, Leader McConnell, Chairman Reed and Ranking Member Inhofe: 

The undersigned organizations strongly support the Blumenthal amendment to the National  Defense Authorization Act for fiscal year 2022. This amendment would prohibit the use of  forced arbitration in contracts covered by the Service Members Civil Relief Act (SCRA) and the  Uniformed Services Employment and Reemployment Rights Act (USERRA). Our nation’s  service members should not be deprived of their Constitutional and statutory rights and  freedoms, which many risk their lives to protect.  

Congress has sought to protect servicemembers with SCRA, keeping them from being victims of  financial abuse, and USERRA, protecting their jobs when they are called to active duty. Both  laws allow service members experiencing illegal misconduct to seek legal redress in court.  However, a growing number of companies are inserting forced arbitration clauses into non negotiable employment and financial contracts. Refusing to sign means forgoing the financial  service or employment. As a result, service member’s rights under both these laws– and  Congress’ intent – are being regularly undermined by forced arbitration clauses. 

Forced arbitration clauses require claims to be heard in private, secret, company-controlled proceedings. They prevent a dispute from being resolved before an impartial judge or jury, and  instead allows the company to select the arbitration firm – a firm that likely relies on that same  company for repeat business and therefore is biased in the company’s favor. Forced arbitration clauses typically dictate the arbitration rules, the location for the arbitration, and the payment  terms, all written for the benefit of the corporation. There is virtually no right to appeal.  

Also prevalent in forced arbitration clauses are provisions prohibiting servicemembers from  banding together in class actions to address widespread, systemic harm. For a mobile population  like the military, class action bans make it even more difficult for servicemembers to obtain a  fair resolution of their claims. Military families are more transient, with limited time and ability  to pursue a case. This is especially true for servicemembers on active duty. A member of the  military whose rights have been violated can pursue a claim as part of a class action and serve  their country at the same time. In contrast, forced arbitration clauses, particularly those with class  action bans, can make it impossible for many harmed service members to take any legal action to  seek remedies.

Studies have shown that those forced into arbitration are less likely to win, receive smaller  awards, and are otherwise severely disadvantaged. According to the Economic Policy Institute,  “Consumers obtain relief regarding their claims in only 9 percent of disputes. On the other hand,  when companies make claims or counterclaims, arbitrators grant them relief 93 percent of the  time—meaning they order the consumer to pay.” 

The negative effects of forced arbitration on servicemembers and their families are so  widespread that a 2006 Department of Defense report concluded the following: “Service  members should maintain full legal recourse against unscrupulous lenders. Loan contracts to  Service members should not include mandatory arbitration clauses or onerous notice provisions,  and should not require the Service member to waive his or her right of recourse, such as the right  to participate in a plaintiff class. Waiver isn’t a matter of ‘choice’ in take-it-or-leave-it contracts  of adhesion.” 

We urge you to support the Blumenthal amendment to the National Defense Authorization Act  for fiscal year 2022. For any questions or for more information, please contact Joanne  Doroshow, Executive Director, Center for Justice & Democracy, joanned@centerjd.org. Thank  you for your consideration.