Who’s In The Consumer’s Corner?

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28 June 2011

Have you applied for a job online, tried to purchase a new cell phone, obtained cable service, or checked your credit score online lately?  Have you applied for a car loan or health care coverage?  If you have, chances are you could not obtain the service, product or job without first signing off on a lot of fine print filled with impenetrable text decipherable only to PhDs.  More and more of everyday American life is controlled by contracts that must be signed in order to receive a product or service.  What’s the big deal?   Isn’t this the cost of doing business?  Some of these clauses are not inherently problematic.  Though largely glossed over by consumers who quickly ‘click through’ in agreement; some assert that these contracts help to make consumer transactions and the handling of any disputes more efficient.

Consumers, however, need to take a closer look.  Embedded in the fine print is a sustained attack upon consumer rights and access to justice.  Before a service, product or job is ever acquired, consumers or individuals must agree to mandatory arbitration to settle all employment, civil rights and consumer disputes.  Arbitration is a private system without any legal protections.  There is no public review of decisions to ensure the arbitrator got it right.  Further, corporations write the clauses, which typically state who the arbitrator will be, under what rules the arbitration will take place, the state the arbitration will occur in, and the payment terms for the arbitration.  Individuals have no say in the process and, because these clauses are in the majority of contracts, a person has no choice but to acquiesce or forgo the product, service, or job altogether.  This ‘forced arbitration’ means giving up the most fundamental legal protection: the right to equal justice under the law.

The recent Supreme Court decision, AT&T Mobility vs. Concepcion, has further weakened consumers’ ability to defend against corporate malfeasance.   Concepcion has significantly restricted consumer and employee access to justice where these clauses are concerned.  By a 5-4 vote, the high court ruled that corporations can ban class actions where there is an arbitration clause in the contract.  In other words, a company can isolate itself from court challenge with an arbitration clause in any contract.  Potentially, as a result of Concepcion, corporations will effectively be immune from a class action suit.  This case represents a win for corporations and a devastating loss to the everyday American.  

With the deck so clearly stacked in favor of corporations, who is in the consumer’s corner?

In addition to working with Members of Congress to increase awareness on this issue, NACA has been leading a coalition called the Fair Arbitration Now (FAN) coalition.  For the past few years, NACA and its allies have been urging Congress to intervene and restore the balance in consumer transactions through introduction and passage of the Arbitration Fairness Act  HR. 1873 and S. 987.  The Arbitration Fairness Act will make any pre-dispute arbitration agreement invalid or unenforceable if it requires arbitration of an employment, consumer, or civil rights dispute. 

This Wednesday, June 29, 2011, the Senate Judiciary Committee will hold a hearing which will shed more light on this issue and examine important questions.  How will Concepcion impact the everyday American, workers and consumers in particular?  How can the balance between individuals and corporations be restored?  The Senate Judiciary Committee hearing is entitled: "Barriers to Justice and Accountability: How the Supreme Court’s Recent Rulings Will Affect Corporate Behavior".  Readers should tune into the hearing – via CSPAN – or try to attend if present locally.

Call your Senator and Representative now and find out whether they are in your corner!  Ask them to co-sponsor the Arbitration Fairness Act of 2011.  Ask Senate Judiciary Committee Members to attend this important hearing.  To contact your member of Congress, you can use the U.S. Capitol Switchboard at (202) 224-3121 and ask for your Senator’s and/or Representative's office.

Delicia Reynolds

Legislative Director, National Association of Consumer Advocates (NACA)