Press Release

The Fair Arbitration Now Coalition is encouraged by Bank of America’s decision to stop requiring its customers to resolve their disputes in the unfair system of forced arbitration.

Statement of David Arkush, Director, Public Citizen’s Congress Watch Division*

We applaud Minnesota Attorney General Lori Swanson for pursuing the National Arbitration Forum (NAF) for deceiving the public with claims of neutrality when, according to Minnesota’s complaint, NAF is allied with debt collectors for the nation’s largest credit card providers. The allegations in the suit Minnesota filed Tuesday reinforce what many advocates of fair arbitration have known for a long time: Arbitration companies treat large corporations as their clients, collaborating with them to deprive consumers of their rights under critical consumer protection laws.

Center for Responsible Lending
June 4, 2009

Consumers have the deck stacked against them when they are forced into mandatory arbitration by their credit card issuer or other financial services provider, an analysis by the Center for Responsible Lending confirms.

Many consumers don't even know that the contracts they sign for most credit cards, auto loans and other small loan products come with hidden clauses that require they use  arbitration rather than the courts if a complaint arises. A recent poll shows Americans believe they should have the right to pursue claims in court if they want.

WASHINGTON, D.C. – Millions of new home purchasers each year are forced into binding mandatory arbitration by deceptive “warranties,” and those warranties may violate the law in as many as 17 states, Public Citizen has found.

This conclusion is contained in a report titled “Home Court Advantage: How the Building Industry Uses Forced Arbitration to Evade Accountability.”

These warranties are particularly insidious because consumers often do not learn of their details until after moving into their new houses. Although builders often portray the warranties as gifts, bonuses or extra protections, the warranties actually serve to exempt the builder from liability for all sorts of problems (such as mold, building code violations and “consequential damages”) while relegating buyers to pursue legal disputes in a private forum chosen by the warranty company.

Statement of Michelle Rechtien of Savannah, Ga.

Because of forced arbitration, my husband and I have been stuck with a house riddled with costly defects. The builder we bought our new home from has used arbitration to force complaints against it into a rigged system so it can avoid accountability.

In September 2006, after my husband John returned from a tour of duty in Iraq, we were transferred to Savannah, Ga., where we bought the new home. The day before we moved in, we found numerous defects in the house during our walk through. We used two rolls of painter’s tape to mark all the defects, and the builder’s customer service representative assured us that the defects would be corrected. The following day, my husband and I closed on our new house.

The house was to be a symbol of our stability and protection for our two children. It turned out to be a nightmare. Shortly after we moved in, the so-called “repair” work began and continued for several weeks; in truth, nothing was adequately repaired.

PUBLIC CITIZEN MEDIA ADVISORY

May 19, 2009

Contact: Joe Newman (202) 454-5188 Rick Claypool (202) 588-7742

Housing Industry Evades Accountability Through Use of Forced Arbitration, Possibly in Violation of States Laws, Public Citizen Report to Show

WHAT:Telephone press conference to issue a report detailing the housing industrys use of forced arbitration, possibly in violation of certain states laws.

New home buyers are usually promised a warranty, which is often characterized as a gift, bonus or extra coverage. But these warranties, which buyers often do not receive until after moving into their house, typically exempt the builder from liability for whole classes of problems, such as mold and building code violations. The warranties also strip buyers of their legal right to go to court, instead relegating them to seeking justice from an arbitration firm hand-picked by the warranty company. These warranties also appear to violate certain states prohibitions on the use of binding mandatory arbitration in insurance contracts. Public Citizen will be calling on attorneys general of these states to investigate.

Public Citizens report chronicles several cases in which home buyers received patently unjust rulings in arbitration and were left with no recourse. The report also reveals myriad conflicts of interest among the building, warranty and arbitration industries. For example, the trade association for the building industry actually formed the first home warranty company, which in turn formed an arbitration firm to handle construction disputes. Construction Arbitration Services, the arbitration firm most associated with the home building industry, evolved from that arbitration firm.

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My name is David William Kurth. My father was William F. Kurth. He loved our country and served many years as an officer in both the United States Army and Wisconsin National Guard. My father was an Eagle Scout and a Boy Scout Leader. He served as a volunteer fireman for our community for more than 25 years. He taught his children and many others to love and serve this country as well. He taught us to obey its laws, respect its traditions and to uphold the rights of others.

He was an honest man. He was a mentor to many people. He was a good man. He was my hero.

Wide support exists across party lines for Arbitration Fairness Act; consumers, employees from around U.S. lobby lawmakers today

Washington, DC – Americans widely oppose corporations using mandatory binding arbitration clauses in the fine print of consumer and employment contracts, according to national polling of likely voters conducted by Lake Research Partners.

Forced arbitration clauses are hidden in the fine print of everything from cell phone, home, credit card and retirement account terms of agreement to employment and nursing home contracts. Just by taking a job or buying a product or service, consumers and employees are forced to give up their right to take their case to court if they are harmed by a corporation.

Good afternoon. I am standing before you to share with you a personal tragedy. I do this to bring awareness to legislation which is designed to ensure that no American will be deprived of their constitutionally guaranteed right to the fair administration of justice before a jury of their peers and judge, skilled in the law.