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What is Forced Arbitration?

The Problem

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 workers – more and more industries are using forced arbitration to evade accountability.

In arbitration, there is no judge, jury, or right to an appeal. Arbitrators do not have to follow the law, and there is no public review of their decisions to ensure that they resolve disputes correctly. Moreover, contracts typically name the arbitration provider that must be used – the one preferred by the company.

Forced arbitration is frequently pricier than taking a case to court, often costing parties thousands of dollars. Individuals are regularly required 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 to participate in the proceedings. In the end, the loser (usually the individual) frequently pays the company’s legal fees.

Forced arbitration strips away our most basic rights and makes many worker and consumer protections unenforceable. Laws such as the Civil Rights Act and the Equal Pay Act that safeguard us from discrimination based on age, sex, religion, race, or disability, and prohibit unequal pay for equal work, become meaningless in arbitration. Workers, for example, lose important protections for blowing the whistle on waste or fraud, or for fighting retaliation for taking family medical leave.

Consumers cannot sue for negligence, defective products, or scams. Even if a retirement account disappears, a home is dangerous or 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, cheated out of wages, or scammed should not be forced into arbitration – they should have a choice.

The Solution: Ban Forced Arbitration

Learn more about why Congress must pass the Forced Arbitration Injustice Repeal (FAIR) Act so that arbitration is always a choice. Consumers, workers, and small businesses must have a fair shot at getting justice when they are harmed. It’s time to put an end to the abusive practice of forced arbitration.