Buried in the fine print of credit card billing inserts, cellular phone service disclosures, employee handbooks, health insurance plans, and franchise agreements, mandatory arbitration clauses eliminate Americans’ access to the courts, forcing them instead into a costly, private legal system that favors corporations. Lenders use these hidden clauses to protect themselves against lawsuits for credit card terms and fees that are buried in the fine print, and car loans and leases with exploding interest rates. Especially in these economic times, it’s time to put an end to this practice that takes advantage of people who are just trying to make ends meet.
Employers and businesses like to say that people have a choice to use arbitration or go to court – but they don’t. If someone refuses to sign a contract with forced arbitration but still shows up for work or uses a product or service, they lose even the option of going to court. Even if they never read the clause – which is usually buried in the fine print – they are forced to use a private legal system of arbitration instead of getting their day in court and a fair jury trial. Americans should never have to give up their rights just to do the everyday things in their lives.
How Consumers are Hurt by the Fine Print
When corporations impose arbitration in non-negotiable contracts, using their bargaining power to take away people’s legal rights, it becomes an abusive weapon. Arbitration can be a fair and effective method of dispute resolution when parties voluntarily agree to arbitrate. Instead, corporations have created one-sided forced arbitrations that burden consumers and deprive them of equal justice under the law.
H.R. 1020, the Arbitration Fairness Act of 2009
When Congress enacted the Federal Arbitration Act (FAA) in 1925, its goal was to allow an alternative forum for commercial parties on equal footing to resolve their disputes. The Arbitration Fairness Act of 2009, introduced by Rep. Hank Johnson (D-GA), reflects the FAA’s original intent by requiring that agreements to arbitrate employment, consumer, franchise, or civil rights disputes be made after the dispute has arisen.
The bill would amend the FAA to prevent the use of pre-dispute mandatory arbitration clauses in consumer, employment and franchise agreements. This legislation would not prohibit arbitration.
The Arbitration Fairness Act would restore traditional market principles to the arbitration industry: giving consumers a choice to arbitrate creates a market in which arbitration companies have to compete for their business, instead of simply catering to corporations. When arbitration is post-dispute—and therefore voluntary—arbitration companies must offer a fair process that both parties would choose willingly.
The Arbitration Fairness Act of 2009 is supported by a broad coalition of groups, including: the AFL-CIO, SEIU, Consumer Federation of America, Alliance for Justice, Center for Responsible Lending, American Association for Justice, Leadership Conference on Civil Rights, National Association of Consumer Advocates, National Consumer Law Center on behalf of their low-income clients, National Consumers League, National Employment Lawyers Association, Public Citizen, U.S. PIRG, NCCNHR: The National Consumer Voice for Quality Long-Term Care, and Consumers for Auto Reliability and Safety.
Please Support the Arbitration Fairness Act of 2009