U. S. Chamber of Commerce Attacks Arbitration Fairness Act, Surprised?

The U.S. Chamber’s Institute for Legal Reform (ILR) yesterday launched a campaign to scuttle important consumer legislation pending in Congress.  The attack is aimed at the Arbitration Fairness Act (S. 1782/H.R. 3010) which is designed to protect consumers, employees and others from having binding arbitration imposed as the only means by which their disputes may be resolved.  For those of you who don’t know, the current problem with arbitration is its growing use by business to provide an edge in resolving disputes with their customers – and it’s appearing everywhere.  If you have a cell phone, credit card, bank account, auto loan, brokerage account, or a number of other goods services, chances are you’ve signed away your right to sue if things go wrong, without even knowing it!

This recent attack by the Chamber is in response to Public Citizen’s detailed report issued last fall which found that arbitrators employed by the National Arbitration Forum ruled against consumers in 94.7 percent of the 19,000 cases involving credit card holders.

In a broad and patently misleading claim the Chamber asserts, "The sweeping legislation pending in Congress would effectively eliminate arbitration, leaving many employees and consumers with little recourse,” said Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform (ILR).  Of course, the legislation does nothing of the sort.  It simply prevents business and employers from forcing arbitration on unsuspecting customers and employees who don’t know they “agreed” to it all, or agreed only because it was a condition of having a job, getting necessary medical care, buying a car, opening a bank account, getting a credit card, and the like. Oftentimes, because of the deliberately fine print used, consumers are not even aware that they have given up their rights.

In a feeble effort to bolster their attack, the Chamber commissioned a survey!  Should we be surprised that the Chamber’s poll found “that 71 percent of likely voters oppose efforts by Congress to remove arbitration agreements from consumer contracts, and 82 percent prefer arbitration to litigation as a means to settle a serious dispute with a company?”  Surveys paid for by special interest groups are notorious for coming up with the result desired by those paying the bills.

The survey’s main finding is beside the point because the legislation does not “remove arbitration agreements from consumer contracts,” it simply forbids business, before any dispute arises, from imposing an agreement to arbitrate as a condition of doing business or employment. In fact, the purpose of the legislation is to insure that when a dispute arises, both parties will have a choice on the best way to resolve their dispute.  We assume that in many cases the parties will agree arbitration is the best way to resolve their dispute.  They will be free to make that choice.  On the other hand, if they prefer legal action, they will have that right.  The legislation simply provides that the business or employer cannot foreclose the option of going to court by inserting arbitration as the only method of dispute resolution in the fine print of the agreement before any dispute ever arises.

Today, many consumer and employment contracts contain provisions mandating the consumer or employee to resolve any future conflicts by arbitration rather than filing a lawsuit.  This has become the norm in cell phone, credit card contracts and investment broker agreements. Historically, arbitration was intended to resolve disputes between businesses, in which each side was knowledgeable and had relatively equal sophistication and bargaining positions.  However, a series of Supreme Court decisions has changed the meaning of the law so that it now extends to disputes between parties of greatly disparate economic power, such as consumer disputes and employment disputes. As a result, a large and rapidly growing number of corporations are requiring millions of consumers and employees to give up their right to have disputes resolved by a judge or jury, and instead submit their claims to binding arbitration.

The result, unfortunately, is that the method of arbitration chosen by business often disfavors the consumer or employee and there is little or no transparency, because the claims are resolved without public scrutiny or meaningful judicial review.  The purpose of Arbitration Fairness Act is to provide the consumer and employee with a real voice over the means by which disputes will be resolved.  The legislation levels the playing field and says that when a dispute occurs both parties will have a say in how it will be resolved.  Undoubtedly, if the method of arbitration offered by business is fair, inexpensive and rapid, many will elect to proceed via that route, however if it appears that the system is tilted to favor the business, the consumer would be free to choose a judge or jury to resolve the dispute.

If the Chamber had asked its poll participants whether they would like to have a voice in how their dispute will be resolved, we are confident the answer would have been an overwhelming yes.  In fact, that is so clear that a survey would not be necessary at all.

Comments

[Jordan Fogal]

Articles on the housing debacle seem to purposely leave out, ignore and not mention some of the main reasons for the "sub prime crisis" . Reasons which led to the lenders' chaos. The banks, the hedge funds and the builders cry out for help like something out of Danes' inferno. All the while taking their bonus checks, of our hard money and stuffing them along side what they have already gleaned from us ...with their thrown up, defective housing. Now since the gravy train has derailed they cry out," help us we wanted more.".Yet the cries and wishes of the middle class go unheard.. It is doubly diabolical that we the tax payer should once again be forced to pay the perpetrators. The government thinks they should help the people who cheated and robbed us of our homes. We hear that consumer confidence is down, and the government seems to be baffled as to the why.. Greed, of course, is at the helm of this perfect storm, prefect for everyone except the once, homeowing tax payer.

The general population has been preyed upon by the greed of shoddy construction, and further destroyed by arbitration clauses which hide the builders role in this housing debacle. I am sickened by the articles on arbitration all written by people who have not endured this diabolical process.
My husband and I have been there. And it is not fair or cheaper, but some times you can get screwed a lot faster, they even have a name for it, it is called," fast track arbitration". As we are dragged behind these closed doors, many of us who are not silenced by gag orders,( carefully termed secrecy agreements) tell of the unbelievable goings on . Most of these so called secrecy agreements conveniently cover up what has occurred inside. Inside, where the rules of law no longer apply, where fraud and perjury are standard fare and the arbitrators turn a blind eye because of...greed. The big builder is their constant meal ticket. We the home owner will never financially recover to be subjected again to this incestuous farce. A farce that is touted as being so good for the consumer they made it mandatory. If in fact this privatization of the justice system is so wonderful why is it mandatory?
Arbitration is a sin against the constitution and the general public. One way to get us out of this crisis is to get the arbitration companies to pony up their unbelievable earnings... after all they tout them selves as non -profit facilitator. Non Profit? We know how much they profited off us.Then check the bank accounts of these lenders and builders and make me feel sorry for them. Sorry they have made only 3 million this year instead of the 25 million the year before. These insidous leaches have made millions off us. The builders and lenders are screaming now Arbitration is an atrocity:

ause their greed became so insasable they have driven this county into a recession. And once again we the people are screwed.
If you would like more on this crisis please google my name Jordan Fogal an read my testimony for the congressional hearing... on the effects of arbitration on the consumer. You may also go to HADD.com or HOBB.org and remember the home you save most likely will be your own.

[Cindy S.]

I've seen the Chamber's press release packaged as real news in mainstream media, but thankfully most reader comment I've seen indicated the public isn't as stupid as the Chamber hopes they are. However, there will be people duped by this "poll" and articles like "No Lawyers Please" that imply no lawyer is needed in arbitration. How much will the consumer like showing up for arbitration and facing corporate lawyers alone? How much will they like the undisclosed high costs, or the bias factor that exists when arbitrators must please their repeat clients, the corporations? The poll obviously didn't include anyone who had been through the kind of arbitration debacles we see at our consumer advocacy group.

[Sherry]

Aribitration is one of the biggest threats to American Constitutional rights. The court system has literally been highjacked by big business and coroporations. The system is no less corrupt that those of some third world countries.

We were served arbitration papers after we had written a letter to our builder stating that we would no longer be pursuing our warranty requests. By doing so, we accepted to take the large financial loss ourselves. We started receiving huge bills from the arbitrating firm right away.

The arbitrator assigned had worked in two lawfirms with the builder's attorney and also was attending educational classes with him. The arbitrating firm did not require the builder to meet the minimum filing requirements per our home contract.

The questionable filing complained of our exercising our civil right to freedom of speech, which is not addressed in our home contract. That's right! They took our Consitutional right of freedom of speech to arbitration and the arbitrating firm accepted the filing.

Greed, greed, greed. The building industry should be ashamed of themselves and they have made their own bed to lie in.