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Posts Tagged ‘Binding Mandatory Arbitration’

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Inching Toward Fair Arbitration

August 31st, 2010 by Sally Brzozowski

Arbitration, the private dispute resolution system where companies essentially get to pick the judges who have total power to make binding decisions, just got a little more consumer friendly.

We are now one step closer to a lending system that restores consumers’ access to the civil justice system. Forced arbitration clauses are all around us in the form of credit card contracts, nursing home contracts, employment contracts, and more. Click here to learn more about the issue and sign a petition in support of Fair Arbitration Now.

Here are the nuts and bolts. The recently passed financial reform bill (also called the Dodd-Frank Act) bans forced arbitration in mortgages. It also gives the new Consumer Financial Protection Bureau authority to restrict or prohibit forced arbitration clauses in consumer financial product and service contracts, following a CFPB study of the issue. Finally, the law provides that the SEC may prohibit or impose conditions or limitations on forced arbitration agreements between broker-dealers and their clients if the SEC finds it “in the public interest and for the protection of investors.”

The Arbitration Fairness Act is moving along as well, and should be voted on by the full House Judiciary Committee this fall. If passed, the Arbitration Fairness Act of 2009 (HR 1020) would end the predatory practice of forcing workers and consumers to sign over their rights by making pre-dispute binding mandatory arbitration (“forced arbitration”) clauses unenforceable.

Click here to follow AT&T Mobility LLC v. Vincent and Liza Concepcion, an arbitration case unfolding in the Supreme Court.

(Photo: tiffa130)

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B of A Drops Forced Arbitration

August 17th, 2009 by Sally Brzozowski

Last week, Bank of America did at least one thing right by consumers when they announced that they would no longer enforce the forced arbitration clauses in their credit card and bank account contracts.

Bank of America is the first major bank to drop forced arbitration, which denies cardholders their day in court by requiring them to settle disputes through bank-chosen private arbitrators.  Forced arbitration stacks the deck against consumers and prevents justice, as we have explained in previous posts.  Just last month, the National Arbitration Forum, the largest arbitration company in the country, responded to a  lawsuit from the Minnesota Attorney General by agreeing to leave the consumer arbitration business entirely.   Slowly but surely, the tide is turning against forced arbitration.

While we welcome these developments, they represent decisions by individual companies.  Consumers will not be safe from the abuses that result from the forced arbitration clauses that are still almost universal in contracts for credit cards, cell phone service, and nursing home care until they are prohibited.  One of the many reasons that we support the Obama administration’s legislative proposal for a Consumer Financial Protection Agency is that it authorizes, and even encourages, the new agency to prohibit forced arbitration in consumer contracts.

But there is also a more direct way to end forced arbitration.  As Fair Arbitration NOW, a coalition of which AFFIL is a member, points out, Congress can “protect all Americans by passing the Arbitration Fairness Act, a bill that would prohibit the enforcement of forced arbitration clauses in consumer, employment, and franchisee contracts,” thus ensuring that consumers are given their day in court.

(Photo: (michelle))

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Minnesota AG Sues National Arbitration Forum

July 15th, 2009 by Sally Brzozowski

Our friend Denise Richardson has picked up on a great story about the fight for regulatory reform.  This time, she’s blogging for the Florida Sun Sentinel about a lawsuit filed by Minnesota Attorney General Lori Swanson:

“In a suit filed on July 14, 2009, Swanson has sued the National Arbitration Forum, the nation’s largest provider of consumer debt collection arbitrations and the company responsible for the arbitration of most credit card customer disputes, alleging that the NAF is not in fact a disinterested party. The suit alleges that NAF is actually owned by one of the corporations that also owns one of the country’s major debt collection enterprises.
All I can say is, kudos AG Swanson!”

Other news outlets are also covering this lawsuit, including the Saint Paul Legal Ledger and Business Week, which last June ran a cover story on NAF’s corrupt and abusive practices.

AFFIL is proud to see people working to end forced arbitration and other predatory practices in the lending industry, and we hope that this case will get us one step closer to a fair financial system.

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Forced Arbitration: Is the end in sight?

July 7th, 2009 by Sally Brzozowski

117048243_7cc6bb0b87We’ve been excited about President Obama’s proposal to create a Consumer Financial Protection Agency since he released his plan last month.  One reason for our enthusiasm has not received as much attention as it deserves: the new agency could bring about the end of forced arbitration!

Forced arbitration clauses are routinely hidden in many types of consumer contracts; credit card, cell phone, and employment contracts all have these provisions.  Forced arbitration strips consumers of their right to sue companies in court, and requires them to settle their disputes through arbitration instead – using arbitrators chosen by the companies.  This biased and unregulated form of judgment lacks the protections normally granted to consumers, and causes all kinds of problems.

The Fair Arbitration Now coalition, of which AFFIL is a member, provides much more information here.  The most outrageous case of forced arbitration that we know of is described here.

Recent posts on the Wall Street Journal’s Law Blog and on Public Citizen’s Consumer Law & Policy blog highlight how the administration’s legislative proposal for the CFPA authorizes, and even encourages, the new agency to prohibit forced arbitration in consumer contracts.

AFFIL has helped shine the spotlight on the need for arbitration fairness in the past, but this seems to be the most promising advance in recent history.  Onward to justice!

(Photo: Joe Gratz)

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Arbitration legislation may pass in Maine

May 7th, 2009 by Will Peirce

Will Peirce is an AFFIL Member and citizen activist in Maine.  To submit updates from your neck of the woods to the AFFIL blog, contact Sarah Byrnes.

Legislators in Maine considered arbitration bills on Wednesday and the outcome looks favorable.   We were lucky that the Superintendent of Consumer Credit Protection, Will Lund, testified in favor of fair arbitration laws.  At the request of legislators, he will assemble a stakeholders meeting to craft legislation that meshes with existing Maine law.  Although it will be politically difficult to go against his non-partisan recommendations, we could end up with a party-line vote out of committee.  But we stand a fair chance of winning, anyway. (more…)

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Today is Arbitration Fairness Day

April 29th, 2009 by Sarah Byrnes

Activists are gathering in Washington today with a simple message:  Forced Arbitration has got to go.

Public Citizen, the National Association of Consumer Advocates (NACA) and other groups are spearheading this effort to bring Forced Arbitration to the attention of lawmakers and the public.

Forced Arbitration occurs when you unwittingly agree to resolve disputes with a company through private arbitration rather than the courts.  Credit card contracts almost always contain a “Binding Mandatory Arbitration” clause.  Since the companies choose the arbitrators, they win about 95% of the time in arbitration.  For more information, see previous blog posts (here and here).

For more info about today’s events and to add your voice to a petition opposing Forced Arbitration, visit www.fairarbitrationnow.org.  For a cool online experience showing why Forced Arbitration has got to go, check out this interactive post from the Consumerist.

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Sign the Petition to End Forced Arbitration

April 27th, 2009 by Sarah Byrnes

Last week, Jim blogged about “Arbitration Fairness Day,” which will be held this Wednesday in Washington.  You can take part in this important event by signing Public Citizen’s petition to end Forced Arbitration.

As the petition explains,

Forced arbitration allows companies to play by their own rules and escape accountability when they harm consumers and employees.

I am troubled that even if you refuse to sign a contract but show up for work or use a product or service, you can lose even the option of going to court. People who have been harmed by discrimination, negligence, defective products or scams should not be forced into arbitration. (more…)

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Next Wednesday is Arbitration Fairness Day

April 23rd, 2009 by Jim Campen

We’re no longer campaigning against “binding mandatory arbitration.”  Instead, the newly-formed Fair Arbitration Now Coalition is seeking to outlaw “forced arbitration.”  It’s the same thing, of course, but the sharpening of the terminology promises to help advocates build support for outlawing this widespread and unscrupulous practice.

Next Wednesday, April 29, has been designated as Arbitration Fairness Day in Washington, D.C.  Details about both the day, the issue, the coalition, and what you can do are available here. (more…)

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Stick It to the Credit Card Companies. Here’s How!

April 15th, 2009 by Sarah Byrnes

Denise Richardson has yet another great column in the Florida Sun Sentinal today.  She suggests switching from a credit card issued by a bank to one issued by a credit union.  She points to research showing that “credit union members were saving an average of $200 every month by transferring their credit card debt from a big bank to a credit union.”  Not bad!

Credit unions regulated by the National Credit Union Association cannot charge interest higher than 18% on their loans, which is another reason to consider switching.  Also, many don’t use Binding Mandatory Arbitration clauses.

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AFFIL Supports the The Arbitration Fairness Act of 2009

March 6th, 2009 by Sarah Byrnes

PDF of the support letter sent to Congress by AFFIL, our Partners, and other groups

Excerpt:

This important legislation would end the predatory practice of forcing non-union employees, consumers and franchise owners to sign away their rights to legal protections and access to the courts by making pre-dispute binding mandatory arbitration clauses unenforceable in civil rights, employment, consumer, and franchise disputes.

Corporations that place mandatory arbitration clauses in their contracts with consumers, non-union employees, and franchisees, shield themselves from accountability for wrongdoing. None of the safeguards of our civil justice system are guaranteed for persons attempting to enforce their employment, consumer and civil rights in binding mandatory arbitration.

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