Business groups claiming to support service members do not
In 1994, Congress passed the Uniformed Services Employment and Re-employment Rights Act (USER) with the goal of prohibiting discrimination against members of the military in employment, as well as ensuring minimal disruption to service members and their families when called into service. In 2003, Congress revised and expanded the Soldiers’ and Sailors’ Civil Relief Act of 1940, creating the Servicemembers Civil Relief Act (SCRA). The new law governs the treatment of service members in rental agreements, evictions, credit card interest rates, mortgage interest rates, foreclosures, civil legal proceedings, auto leases, life insurance, health insurance, income tax payments, etc.
But forced arbitration agreements inserted into many consumer and employment contracts circumvent these legal protections for service members, undermining the very reasons these bills were passed. The result is that big corporations routinely fire service members, seize their family homes, repossess their cars, rip off their pensions and even profit from life insurance policies after service members are killed, according to a 2018 report of the American Association for Justice. In 2012, the U.S. Government Accountability Office (GAO) uncovered 15,000 cases of financial institutions failing to reduce mortgage interest rates for service members who qualified for a mortgage rate cap. ‘interest. And each year, the GAO has determined that more than 300 illegal seizures occur in violation of SCRA.
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Violations of the SCRA are criminal and the law provides for jail time. During the financial crisis, major banks like JPMorgan Chase, Wells Fargo, Bank of America and Citigroup paid hundreds of millions of dollars penalties for unlawfully seizing active duty service members, in some cases while serving overseas. But no one went to jail, and arbitration agreements further protect big companies from liability.
Stand-alone bills such as the Justice for the Military Act would directly address the loophole, ensuring that the military choose for themselves whether or not to go to arbitration. The senses. Richard Blumenthal (D-CT) and Lisa Murkowski (R-AK) also changes previously included to the National Defense Authorization Act which mirror the stand-alone Military Justice Bill.
Today, a group of 31 service members and veterans advocacy organizations sent a letter to the leaders of the Senate Armed Services and Veterans Affairs Committees, urging them to support the Military Justice Act, a related upcoming Senate bill, and any amendments to the NDAA that include the wording of the bill .
But organizations that claim to support the military and its members are the most vocally opposed to such reforms.
The Chamber of Commerce boasts of its “Hire our heroes“, which helps service members obtain scholarships in a range of sectors and partner companies. Yet, in the first quarter of 2022, the Chamber spent $18.6 million in lobbying expenses. Disclosure Forms reveal that these activities included lobbying on the NDAA and the 2021 law ending forced arbitration of sexual assault and sexual harassment.
On March 3, President Biden signed the Sexual Assault Bill in the law. During the signing ceremony, Biden signaled his support for broader reforms against the practice. “I know there are discussions in Congress about whether forced arbitration clauses should also be prohibited for other types of labor disputes beyond sexual harassment and assault. I think that everything is wrong and that they should be banned. he said.
Big corporations routinely fire Service members, seize their family homes, repossess their cars, rip off their pensions, and even profit from life insurance policies after Service members are killed.
The Consumer Bankers Association, a trade group that includes some of the largest financial institutions, says it supports service members through investment initiatives. The ABC even has supported extending lock protections under SCRA from three months after separation to one year. But their support rings hollow as long as forced arbitration clauses can circumvent those protections.
The ABC has spent $790,000 lobbying against the Military Loans Act, which forbidden to banks to require military personnel to submit to forced arbitration and set a maximum annual rate for loans to 36 percent military personnel. Their lobbying activities also include issues related to the SCRA.
The Chamber of Commerce and the ABC did not respond to the Perspective‘s requests for comments.
Last year on Veterans Day, the American Financial Services Association (AFSA), in a blog post titled “Remembering America’s Bestargued that the MLA is actually hurting members of the military because reputable lenders are unable to offer small loans below a 36% interest rate. AFSA’s lobbying activities, which so far total $280,000 This year, have included lobbying on MLA and SCRA “termination of lease” provisions. In other words, forced arbitration clauses.
In a statement to Perspective, the AFSA distinguished its practices as “traditional installment loan products” from predatory lenders such as payday loans and self-title loans. The AFSA said the MLA should “clearly target payday loans“.
TO SEE HOW ARBITRATION AGREEMENTS affect service members, consider the case of U.S. Navy reservist Kevin Ziober. In 2018, after ten years in the reserves, Ziober was a lieutenant commander overseeing the training and mobilization readiness of a 130-member intelligence unit based in San Diego.
As a reservist, Ziober hoped future employers would understand that his military career could require deployment on short notice for weeks, months, or even years at a time. In 2010, Ziober began working as a manager for BLB Resources, Inc., a federal contractor located in Irvine, California. Over a two-year period, Ziober helped grow the company from 18 employees to 90.
But six months after taking office, Ziober recalled in testimony before the Senate Judiciary Committee, BLB asked him and other employees to sign several legal documents, including an arbitration agreement, as a condition of keeping their jobs. Eighteen months later, in November 2012, he was officially ordered by the Navy to deploy to Afghanistan for a year. Ziober testified that BLB had known for months that the deployment was imminent.
On November 30, 2012, Ziober’s last day of work, BLB threw a surprise party in his honor. He said: “There was even a big cake with an American flag decorated in red, white and blue, with the inscription ‘Best wishes, Kevin.’ After his party, Ziober was called in for a meeting with the human resources manager, his supervisor, and what he guessed was a labor consultant or attorney. He was told that he would have no work waiting for him when he returned from Afghanistan.
“The shock of learning that I was being fired from my job on the eve of my deployment to a combat zone created an unimaginable amount of worry and anxiety about how I would support myself and those of my family when I return,” Ziober said. “Within hours, I went from feeling supported, proud and focused on serving my country to feeling embarrassed, confused and concerned for the well-being of my loved ones.”
Ziober’s experience with forced arbitration is why veterans’ and service members’ advocacy groups have long called for an end to the practice.
For advocates like the Veterans of Foreign Wars (VFW), the passage of the Military Justice Act or its inclusion in the latest NDAA is to restore the rights granted to military personnel under USERRA and the SCRA, and to allow individuals to decide for themselves whether to go to court. On a larger scale, forced arbitration decreases troop readiness. “Adding stressors is the worst thing you can do to the people we send into danger,” said VFW legislative director Patrick Murray.
Groups like the Chamber of Commerce, AFSA and ABC proclaim to the public that they support the troops, but critics say their lobbying activity is actively worsening the lives of service members and their families.
The AFSA told the Perspective that he did not support the Justice for Service Members Act or current and previous versions of the NDAA that include language from the bill. Instead, the AFSA said: “Arbitration has been shown to help consumers, including the military, time and time again. It’s faster, cheaper, and has a better track record of consumer relief than class action lawsuits.
Forced arbitration providers are not required to report the number of cases filed, only those that are closed, but this number has increased since 2017. Contrary to claims by the AFSA, the pass rate for consumers and workers has fallen below the five-year averages. In 2020, 4.1% of consumers won their case. And for the workers, only 82 individuals, representing 1.6% of the cases, obtained a monetary reward by forced arbitration.
As Murray told the Perspective“I can’t understand a real justification for [forced arbitration]. It is not better for the troops or the military.