Legal experts were joined by Senator Al Franken and Congressman Hank Johnson
to highlight a NY Times investigation which concluded consumers are being
stripped of their ability to file class-action lawsuits against more and
more companies. Arbitration clauses, tucked away in the fine print, are
the latest way companies are circumventing lawsuits and preventing checks
on their illegal conduct. These arbitration clauses state that disputes
regarding a specific product or service can only be resolved through privately
appointed arbitrators, barring consumers from filing class-action lawsuits.
According to Representative Johnson, forced pre-dispute arbitration is
neither arbitrary nor fair. Johnson goes a step further, calling forced
arbitration un-American.
More Consumer Protections Needed
Just last month, the Consumer Financial Protection Bureau announced they
were considering rules which would prevent financial institutions and
companies from barring consumers from filing class-actions suits and forcing
them into arbitration. While admitting this is a step in the right direction,
consumer advocates believe the CFPB and other consumer protection agencies
should do more. After introducing the Arbitration Fairness Act earlier
in November, Senator Franken says he has had difficulty securing Republican
support for the Act. The proposed legislation would make forced pre-dispute
arbitration agreements unenforceable. Rather than support this Act, Republican
lawmakers are attempting to set even more limits on class action lawsuits
from consumers.
Most Consumers Unaware of Arbitration Clauses
Consider this: On page 5 of a credit-card contract currently used by American
Express, buried beneath a lengthy explanation about interest rates and
late fees, is a clause most consumers probably skim right over. American
Express explains in this clause that, should consumers have an issue with
their account, American Express retains the right to resolve any potential
claim through arbitration. American Express, along with countless others,
has thus devised a way to completely work around ever having a class action
lawsuit filed against them. Considering class action lawsuits are virtually
the only tool consumers have to fight illegal or deceitful business practices,
this is bad news for consumers. It has become increasingly difficult for
consumers to apply for a credit card, obtain cable or Internet services,
get a job, rent a car, shop online, or even sign up with a cellphone company
without being bound by pre-disputearbitration clauses.
Class Action Suits Dismissed Due to Arbitration Clauses
Some of the potential class action suits which have been dismissed, due
to the presence of an arbitration clause include: a travel-booking website
accused of conspiring to fix hotel prices, mysterious charges which appeared
on Time Warner customer bills; and African American employees of Taco
Bell who claimed they were forced to work the worst shifts, denied promotions
and subjected to demeaning comments. In essence, banning class action
lawsuits and denying access to courtrooms through pre-dispute arbitration
clauses has disabled consumer challenges associated with wage theft and
discrimination as well as predatory lending. The move to block consumer
class action lawsuits was led by credit-card companies and retailers and
was backed by two Supreme Court rulings in 2011 and 2013 which upheld
the ban on class-action suits in one-sided contracts. Few consumers were
even aware of the rulings, and few consumers notice the arbitration clause
in their contracts.
Once consumers realize they have been blocked from filing a class action
lawsuit, most will drop their claims entirely once they realize how expensive
arbitration really is, as well as how difficult it is to prevail in arbitration.
If you are one of the many consumers who has suffered financial harm from
an arbitration clause, it could be beneficial to speak to a knowledgeable
attorney. In the meantime, show your support for the proposed Act which
will protect consumers from fraudulent practices by big businesses.
Consumer Class Action Attorneys on Your Side
If you suffered harm due to deceptive financial practices, please
contact the consumer class action attorneys at Golomb & Honik, P.C. for your
free case consultation. Consumers who have suffered because of a company's
negligence or fraudulent behavior need an experienced and skilled consumer
class action attorney on their side.
To learn more about your rights and legal options, call the Philadelphia
consumer class action lawyers at Golomb & Honik, P.C. today at 1-800-355-3300
or 1-215-985-9177 or fill out our confidential
Contact Form.