PUBLIC CITIZEN MEDIA ADVISORY
May 19, 2009
Contact: Joe Newman (202) 454-5188 Rick Claypool (202) 588-7742
Housing Industry Evades Accountability Through Use of Forced Arbitration, Possibly in Violation of States Laws, Public Citizen Report to Show
WHAT:Telephone press conference to issue a report detailing the housing industrys use of forced arbitration, possibly in violation of certain states laws.
New home buyers are usually promised a warranty, which is often characterized as a gift, bonus or extra coverage. But these warranties, which buyers often do not receive until after moving into their house, typically exempt the builder from liability for whole classes of problems, such as mold and building code violations. The warranties also strip buyers of their legal right to go to court, instead relegating them to seeking justice from an arbitration firm hand-picked by the warranty company. These warranties also appear to violate certain states prohibitions on the use of binding mandatory arbitration in insurance contracts. Public Citizen will be calling on attorneys general of these states to investigate.
Public Citizens report chronicles several cases in which home buyers received patently unjust rulings in arbitration and were left with no recourse. The report also reveals myriad conflicts of interest among the building, warranty and arbitration industries. For example, the trade association for the building industry actually formed the first home warranty company, which in turn formed an arbitration firm to handle construction disputes. Construction Arbitration Services, the arbitration firm most associated with the home building industry, evolved from that arbitration firm.
NOTE: Embargoed copies of the report are available. Call one of the numbers listed above.
WHO:David Arkush, director of Public Citizens Congress Watch division Taylor Lincoln, research director of Public Citizens Congress Watch division Michelle Rechtien, of Savannah, Ga., home buyer Jordan Fogal, of Houston, Texas, home buyer
WHEN:1 p.m. EDT, Wednesday, May 20
WHERE:Call 1-800-377-8846 and enter passcode: 36707396#
MORE: For more information about forced arbitration, go to: www.fairarbitrationnow.org
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