We have previously talked about the disadvantages to consumers of forced arbitration clauses in the contracts they sign. These clauses are common in credit card agreements, private student loan contracts, and cellular service provider contracts. When you sign a contract with a forced arbitration clause—whether you know it is there or not—you are agreeing to take any dispute you have with the contract holder to arbitration rather than to court. This is bad for consumers because the company chooses the arbitration company and always has lawyers to argue their side. While consumers are entitled to bring an attorney with them, about 40 percent of them do not. Arbitrators often find in favor of the company in these hearings and the consumer has no right to appeal if he disagrees with the decision.
Ban on Forced Arbitration Was Passed in 2016
The Consumer Financial Protection Bureau (CFPB), issued a proposed rule to ban forced arbitration clauses for class action claims in all consumer contracts in 2016. The rule was set to take effect in March of 2018. However, this ruling is very unpopular with corporate leaders and with many Republican lawmakers. This summer, the House of Representatives voted in favor of overturning the ban, which sent the proposal to the Senate. While it looked for a time like the Senate would have enough votes as well, efforts were stalled in the wake of the Equifax data breach. The Senate has now passed this bill and President Trump has promised to sign it.
What’s So Bad About Forced Arbitration?
The bottom line is that consumers who are forced to go into arbitration when they have a dispute with a company fare much worse than consumers who are free to file a lawsuit or join a class action. In fact, the average arbitration outcome is just seven percent the size of a court ruling. When consumers can’t get their day in court, corporations win. A ban on forced arbitration is very popular with voters, which is why Republican lawmakers are trying to stop the ban before it takes effect. The less the voters know, the better.
If You Have a Serious Dispute, Call The Consumer Law Group, P.C.
Even if you are forced into arbitration, you should have an attorney with you. If you have a dispute with a credit card company, loan holder, or service provider, contact our consumer attorneys before you go to arbitration. We will let you know if we can help.