With National Consumer Protection Week kicking off March 1st, it’s a good time to warn about an anti-consumer clause that’s buried in the fine print of many contracts for goods and services: mandatory arbitration. Forced arbitration means you forfeit your constitutional right to a jury trial if a dispute develops with the company, and instead must submit to the decision of an arbitrator’s ruling that cannot be appealed.
Clauses are common
Mandatory arbitration clauses are now commonplace in contracts with cell phone providers, gyms, credit cards, banks, and even doctors and employers. By signing such contracts, you give up your right to pursue a claim in court. Arbitration in these scenarios has generally proven to be one-sided, favoring the company over the consumer.
Real life examples
Consider the case of an 88 year-old Rent-A-Center customer who rented a refrigerator and was reportedly beaten by a company repairman servicing his appliance. Turns out the customer had to arbitrate the case for damages because the rental contract contained a mandatory arbitration clause.
Imagine having a medical procedure and being permanently injured because of negligence. If there was an arbitration clause in the sign-in paperwork, you couldn’t bring a medical malpractice claim before a jury of your peers. Instead, everything at stake would be decided by an arbitrator and that would be final.
Efforts for change
Attorneys General from 16 states recently urged the Consumer Financial Protection Bureau to protect consumers’ fundamental constitutional right to a jury trial and to make federal rules that would prohibit or limit forced arbitration clauses in contracts for financial products. We need to expand this effort. The American Board of Trial Advocates, with membership made up of civil plaintiff and defense attorneys, nationwide, adopted a resolution calling for knowing, voluntary and intentional agreement to be clearly proved before binding arbitration can be enforced.
What you can do
In the meantime, the onus is on all of us to look for mandatory arbitration clauses. If you see one, you could choose not to do business with the company and tell them why, and instead, do business with a company that doesn’t require mandatory arbitration as part of its contract. You could also strike through the language containing the arbitration clause before signing the contract. Some businesses may be willing to forgo the arbitration clause in the contract because they want your business.