Most Americans don’t know that they are bound by forced arbitration. Buried in the fine print of employment, cell phone, credit card, retirement account, home building, and nursing home contracts are mandatory arbitration clauses. Just by taking a job or buying a product or service, individuals are forced to give up their right to go to court if they are harmed by a company. Because the private system of forced arbitration benefits companies – and disadvantages consumers and employees – more and more industries are using forced arbitration to evade accountability.
In arbitration, there is no judge, jury or right to an appeal. The arbitrators do not have to follow the law, and there is no public review of decisions to ensure the arbitrator got it right. Moreover, contracts typically name the arbitration that must be used – the one preferred by the company.
Forced arbitration frequently costs more than taking a case to court, and can cost thousands of dollars. Individuals often have to pay a large fee simply to initiate the arbitration process. Then in order to arbitrate, individuals sometimes have to travel thousands of miles on their own dime. In the end, the loser (usually the individual) often pays the company’s legal fees.
Forced arbitration strips our most basic rights and makes many employee and consumer protections unenforceable. The laws that protect us from discrimination based on age, sex, religion, race, disability, and unequal pay for equal work, such as the Civil Rights Act and the Equal Pay Act, become meaningless and unenforceable in arbitration. Employees lose important protections for blowing the whistle on waste or fraud or for fighting retaliation for taking the family medical leave, for example.
Consumers cannot sue for negligence, defective products or scams. Even if a retirement account disappears, a home is dangerous and defective, or a loved one suffers harm in a nursing home, a forced arbitration clause means there is no right to take the company responsible to court.
People who have been harmed by discrimination, negligence, defective products or scams should not be forced into arbitration: they should have a choice.
Congress must pass the Arbitration Fairness Act so that arbitration is always a choice. Consumers and employees must have a fair shot at getting justice when they are harmed by companies. It’s time to put an end to the abusive practice of forced arbitration, and to bring more accountability to the business world.