In the past, I’ve written articles about how forced arbitration requires disputes to be settled by privately appointed arbitrators rather than the court system.
Arbitration robs consumers of their day in court. In addition, few consumers resolve disputes through arbitration, and when they do, businesses almost always win.
Arbitration clauses are buried in the fine print of contracts for credit cards, bank accounts, student loans, cell phones, medical services, and many other consumer products and services. The clauses are even being used in employment contracts.
A recent series on arbitration by The New York Times sheds light on why so many companies and corporations are requiring arbitration.
Years ago, attorneys were searching for ways to protect corporations from lawsuits by consumers, some of which resulting in large judgments for consumers. They came up with banning class action lawsuits and requiring consumers to settle complaints by arbitration rather than lawsuits.
One of the attorneys arguing to do away class action lawsuits was John G. Roberts. Although Roberts lost his case, he now serves on the U.S. Supreme Court where he votes against the use of class action lawsuits, according to a Times article.
The Times also investigated dozens of arbitration cases and found that consumers usually lose.
Over the last 10 years, thousands of businesses across the country – from big corporations to storefront shops – have used arbitration to create an alternate system of justice. There, rules tend to favor businesses, and judges and juries have been replaced by arbitrators who commonly consider the companies their clients, The Times found.
The Times also reported on Christian arbitration. Through arbitration, religion is being used to decide secular problems such as claims of financial fraud and wrongful death. Companies tell their customers that disputes may be resolved according to biblical principles.
Religious arbitration clauses have often proved impervious to legal challenges, The Times said.
“Forced arbitration is a corporate bullying tactic designed to kick people out of court and eliminate their right to seek justice,” said Linda Lipsen, CEO for the American Association for Justice, a group of trial lawyers who work for a balanced judicial system. “It’s a rigged system set up by corporations to favor corporations.”
Lipsen said big businesses are using fine print to take away the rights of consumers, patients, and workers.
“Corporations use forced arbitration because they know that when they lie, cheat, and steal from the public, the fine print gives them a free pass to break the law and evade all accountability,” she said.
All consumers should take the time to read the three articles in The Times’ series. It’s vital that they know their rights are being severely restricted most of the time when they sign a contract.
A survey by the U.S. Consumer Financial Protection Bureau showed that more than 75 percent of credit card consumers surveyed didn’t know whether they were subject to an arbitration clause in their contract. Fewer than 7 percent realized that the clauses restricted their ability to sue in court.
Here are the links to the articles in The Times’ forced arbitration series:
- “Arbitration Everywhere, Stacking the Deck of Justice”
- “In Arbitration, a ‘Privatization of the Justice System’”
- “In Religious Arbitration, Scripture Is the Rule of Law”
