Congress Eyes Mandatory Arbitration Clauses in Contracts
If you have a credit card, buy a car, or sign up for a cellphone plan, and chances are, if you're unhappy with your transaction, you won't be telling your story to a judge.
Many consumer contracts include mandatory arbitration clauses that force individuals to go through arbitration, instead of civil court, if a dispute arises. Some of these clauses also ban customers from joining class-action lawsuits.
For years, consumer advocates have claimed these clauses are unfair.
Now Congress is considering a blanket negation of predispute mandatory arbitration agreements. The Arbitration Fairness Act of 2007, recently introduced in the Senate and House of Representatives, proposes making the clauses unenforceable. The Arbitration Fairness Act, introduced in the Senate and the House on July 12, would amend the Federal Arbitration Act passed in the 1920s. which was intended to settle disputes between companies of similar size and power. But a series of Supreme Court decisions broadened the law to consumer cases.
''This is, by far, the most comprehensive bill that has been introduced. There have been bills that ban arbitration in the employment section or the banking section,'' said Paul Bland, a staff attorney with Public Justice, a national nonprofit public-interest law firm in Washington, D.C.
I think this legislation is absolutely needed and highlights consumers' vulnerability when it comes to arbitration. While concept of arbitration is good, the arbitration system is not set-up to be fair to consumers. First, many times consumers overlook arbitration clauses, but by purchasing goods or services governed by such clauses, they agree to settle any disputes through arbitration, giving up their right to a jury trial. Decisions by arbitrators -- lawyers or professionals who oversee and rule on cases -- are final and cannot be appealed.
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