Release Date: 
December 17, 2013
| Filed under: 

For Immediate Release: December 17, 2013

Contact: Ellen Taverna
202-452-1989, ext. 109


Washington, DC— The following is a statement from National Association of Consumer Advocates (NACA) in response to the Senate Judiciary Committee Hearing entitled: “The Federal Arbitration Act and Access to Justice: Will Recent Supreme Court Decisions Undermine the Rights of Consumers, Workers, and Small Businesses?”

When Congress enacted the Federal Arbitration Act (“FAA”), its goal was to allow businesses on equal footing to resolve their disputes. Many years later, the Supreme Court has broadly expanded the scope of the FAA to allow corporations to insert arbitration clauses in one-sided, non-negotiable contracts and override both Congressional action and state laws intended to protect consumers and workers.

In 2011, the Supreme Court held that corporations may use forced arbitration clauses to deny consumers their right to join together in class actions to hold corporations accountable. This has had an enormous impact on consumers—where the value of claims can be small individually, but large in the aggregate, and class actions are often the only way of revealing widespread corporate fraud.  The Supreme Court further expanded corporations’ ability to evade the enforcement of critical federal laws with its decision in American Express v. Italian Colors Restaurant (June 2013). In this case, small businesses sought a class action to pursue their claims that American Express had violated federal antitrust laws. The Court held that the class action ban and forced arbitration clause in the contracts were enforceable—even in cases where the cost of individual arbitration would, as a practical matter, prevent the vindication of rights under federal law.

Minnesota NACA member and consumer attorney, Vildan Teske, testified about the consumers and servicemembers whose rights have been obliterated by forced arbitration.

 “We are pleased the Senate is holding a hearing to examine how forced arbitration strips consumers, servicemembers and workers of fundamental rights, such as the right to a jury and the right to join together to hold corporations accountable,” said Ellen Taverna, legislative director of the National Association of Consumer Advocates.

The Supreme Court’s recent decisions highlight the desperate need for Congress to amend the Federal Arbitration Act.  The Arbitration Fairness Act of 2013(“AFA,” H.R. 1844/S. 878), introduced by Senator Franken (D-MN) and Rep. Hank Johnson (D-GA) reflects the FAA’s original intent by requiring that agreements to arbitrate employment, consumer, civil rights or anti-trust disputes be made after the dispute has arisen.The AFA restores the balance between individuals and powerful corporate interests by reinstating American’s ability to choose to hold corporations accountable for wrongdoing in a courtroom or in arbitration.

The time is now for Congress to ban forced arbitration for all America’s consumers, servicemembers and workers.

The National Association of Consumer Advocates (NACA) is a nonprofit 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.