NACA along with 46 other Worker and Consumer Advocates Call on Congress to Pass the Arbitration Fairness Act and Stop Forced Arbitration

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The National Association of Consumer Advocates and a coalition of 46 other public interest organizations joined a letter urging Congress to pass the Arbitration Fairness Act of 2013, (AFA), S. 878 and H.R. 1844, introduced by U.S. Sen. Al Franken (D-Minn.) and in the House of Representatives by Rep. Hank Johnson (D-Ga.). This legislation would help reverse a trend of companies using contractual fine print to force wronged workers and consumers out of the courts and into binding mandatory (or forced) arbitration that often favors the company.

Unscrupulous businesses use forced arbitration in student loans, payday loans, credit card contracts, auto deals, rent-to-own and other everyday transactions knowing that they will not be held accountable by an impartial judge or jury, but rather by arbitrators who rely on those very corporations for business.  The contracts 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. Arbitration clauses are often contained in non-negotiable contracts and a person has no choice but to acquiesce or forgo the goods, services and/or employment altogether.

Americans should never have to give up their rights just to do the everyday things like buying a car, using a cell phone, or having a credit card.  No American should have to choose between their right to access our justice system or having a car or a phone.

“With nearly no oversight or accountability, businesses or their chosen arbitration firms set the rules for the secret proceedings, often limiting the procedural protections and remedies otherwise available to individuals in a court of law,” the coalition letter says. “For example, the ability to obtain key evidence necessary to prove one’s case is restricted or eliminated. In addition, the exorbitant filing fees, continuous fees for procedures such as motions and written findings, and ‘loser pays’ rules in arbitration are prohibitive to many individuals, particularly in this weak economy when so many Americans are struggling just to make ends meet.”

The AFA would ban forced arbitration in consumer and employment contracts, although it would not affect collective bargaining agreements. Voluntary arbitration and other forms of dispute resolution would remain intact. The legislation is designed to restore the congressional intent behind the 1926 Federal Arbitration Act (FAA), which provided for parties of similar power to resolve disputes through arbitration

The U.S. Supreme Court’s interpretation of the FAA was broadly expanded to permit corporations to prevent consumers and employers from joining together in class actions. On April 27, 2011, the court ruled in AT&T Mobility v. Concepcion that companies can use arbitration clauses to ban class actions in the fine print of contracts. As a result, thousands of valid legal claims by consumers and employees that expose corporate abuses have been suppressed and prevented from having their day in court. A 2012 NACA survey of hundreds of consumer lawyers found that the vast majority were much less likely to represent consumers in arbitration than they would be to represent consumers in court.

“The Concepcion ruling makes it all the more vital for Congress to pass the AFA to provide individuals with a choice to arbitrate a claim rather than forcing them into arbitration,” says the letter. “The AFA would eliminate use of these pre-dispute clauses in consumer and employment contracts, returning the FAA to its original intent to facilitate private arbitration between sophisticated parties on equal footing.”

“By being forced into binding mandatory arbitration, an estimated 30 million non-union workers have lost essential protections established by our nation’s civil rights laws,” the coalition writes, providing a long list of fundamental legislated protections that are threatened by forced arbitration:

“Other laws at risk include provisions of the Civil Rights Acts of 1964 and 1991, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act, the Equal Pay Act, USERRA, the Sherman Antitrust Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act, the Dodd–Frank Wall Street Reform and Consumer Protection Act, the Servicemembers Civil Relief Act, the National Defense Authorization Act for Fiscal Year 2013 (amending the Military Lending Act), the Lilly Ledbetter Fair Pay Act of 2009, the Telephone Consumer Protection Act, the Fair Debt Collection Practices Act, the Credit Repair Organizations Act, the Electronic Fund Transfer Act, the False Claims Act, the Fair Credit Reporting Act, the Right to Financial Privacy Act, the Real Estate Settlement Procedures Act, the Truth in Lending Act, and the civil provisions of the Racketeer Influenced and Corrupt Organizations Act.”

The organizations sending this letter are:

9to5

Association of University Women (AAUW)

American Federation of Labor-Congress of Industrial Organizations (AFL-CIO)

Alliance for Justice

American Association for Justice

American Civil Liberties Union

Americans for Financial Reform

Center for Justice & Democracy

Center for Responsible Lending

Citizen Works

Committee to Support the Antitrust Laws

Consumer Action

Consumers for Auto Reliability and Safety

Consumer Federation of America

Consumer Watchdog

Consumers Count

Consumers Union

DC Consumer Rights Coalition

Every Child Matters Education Fund

Empire Justice Center

Homeowners Against Deficient Dwellings

Home Owners for Better Building

Lawyers’ Committee on Civil Rights under the Law

Leadership Conference on Civil and Human Rights

Maryland Consumer Rights Coalition

NAACP

National Association of Consumer Advocates

National Association of Shareholder and Consumer Attorneys (NASCAT)

National Community Reinvestment Coalition

National Consumer Law Center (On behalf of its low income clients)

The National Consumer Voice for Quality Long-Term Care (formerly NCCNHR)

National Consumers League

National Council of La Raza

National Fair Housing Alliance

National Employment Law Project

National Employment Lawyers Association

National Partnership for Women & Families

National Women’s Health Network

National Women’s Law Center

New Jersey Citizen Action

People for the American Way

Public Citizen

Union Plus

U.S. Public Interest Research Group

West Virginia Association for Justice

West Virginia Citizen Action Group

Woodstock Institute