Consumer Attorneys report: Arbitration clauses are everywhere, consequently causing consumer claims to disappear.
A June 2012 survey by the National Association of Consumer Advocates (NACA) demonstrates: pre-dispute arbitration clauses are depriving consumers of their rights; fewer cases are being brought as consumer claims are suppressed by companies’ increased use of forced arbitration clauses.
Washington, D.C.– Results of a new nationwide survey published on June 23rd by the National Association of Consumer Advocates (NACA) shows thatcompanies’ increased use of forced arbitration clauses is suppressing consumer claims.
The NACA survey of approximately 350 consumer attorneys in 46 states reported that 84% of all consumer attorney respondents said that they have evidenced claim suppression.Over 250 stories were shared by consumer lawyers that demonstrate the instances where consumer claims could not move forward because of an arbitration clause. Consumer attorneys also shared stories of important consumer class actions that would not have been possible if the underlying contract included an arbitration clause.
Of the respondents who participated in the question, almost 90% of the survey respondents have turned away cases because the underlying contract had an arbitration clause. Of the 68% of respondents who have brought consumer class actions, 91.4% said that the relief would not have been possible had an arbitration clause been involved. Many respondents noted that since the U.S. Supreme Court decision in AT&T Mobility v. Concepcion, they have seen a rise in the use of pre-dispute arbitration, thus, resulting in a significantly fewer number of consumer claims moving forward in any forum.
The survey demonstrates that arbitration agreements are not just present in consumer contracts for financial services and products; they are in everyday consumer contracts from health club contracts to cable television services to nursing home contracts. The survey revealed the top reasons arbitration was seen as disadvantage to consumers to be: 1) an uneven playing field, 2) limited recourse for the consumer, 3) questionable objectivity of the arbitrator and 4) lack of transparency. Few consumer attorneys – less than 5% according to the survey – report to have experience representing consumers in arbitration.
The stories and concerns expressed by consumer attorneys in this survey calls attention to why companies are choosing to force consumers to arbitration. Unless brought collectively through a class action, many consumers with small dollar claims against a company will have no incentive to bring their claim in arbitration or otherwise. Whether it’s because the contract has a class action waiver or because the consumer declines to arbitrate their claim due to excessive fees or an inability to travel long distances, it means that companies get a free pass to violate consumer rights without repercussions.
“Attorneys are increasingly forced to turn away consumers who had clear, actionable grievances against businesses, because of the existence of an arbitration clause or an arbitration clause with a class action waiver,” said NACA’s Legislative Director, Delicia Reynolds Hand. If very few consumer attorneys are representing consumers in arbitration and many are being turned away from going to court, we need to ask what is happening to all of these harmed consumers?
If you have any questions regarding the NACA survey or would like more information regarding the stories produced by the consumer attorney survey respondents, please contact Delicia Reynolds Hand at Delicia@naca.net.
The National Association of Consumer Advocates (NACA) is a non-profit association of consumer advocates and attorney members who represent hundreds of thousands of consumers victimized by fraudulent, abusive and predatory business practices. As an organization fully committed to promoting justice for consumers, NACA's members and their clients are actively engaged in promoting a fair and open marketplace that forcefully protects the rights of consumers, particularly those of modest means.