The Baltimore Sun’s personal finance writer Eileen Ambrose yesterday provided an apt synopsis of forced arbitration and the need to change the status quo. The article described the all-too-common practice of businesses inserting forced arbitration clauses in the fine print of consumer contracts, which eliminate consumers’ ability to go to court and force them to settle disputes in a corporate-controlled, biased forum.
Ambrose reported that it is nearly impossible for consumers to avoid falling into the forced arbitration trap. For example, she told of David Leibowitz, a lawyer who was aware of the perils of forced arbitration but was still unable to remove an arbitration clause from a Toyota lease. Leibowitz said he signed the lease "under protest," but little good that will do for him if he falls into a dispute with Toyota.
Ambrose also mentioned two ways that consumers can try to avoid arbitration clauses: one, do business with smaller companies, and two, take advantage of the 30-day "opt out" provision that some corporations include in their consumer contracts. But it would be difficult to find a small company that provides, say, cell phone services. Further, small business status is not an indicator of better business practices. Some sophisticated small companies, such as doctors’ offices, are beginning to insert these clauses into their consumer contracts to deprive their clients and their employees of their right to go to court.
As for opt-out provisions, consumers are often unaware of them because typically they are even more deeply hidden in contracts’ fine print than the arbitration clauses. To truly avoid forced arbitration, consumers will have to deprive themselves of significant necessities, such as a house, a cell phone, or nursing home care for or a loved one. Ambrose rightly notes that it will take an act of Congress or inspired rulemaking by the much-anticipated Consumer Financial Protection Bureau to restore consumers’ ability to choose how to settle a dispute with businesses. Until then, few options remain.