Does your credit card or bank loan agreement have an “arbitration clause?” More and more consumer-oriented contracts and “agreements” have clauses specifying that disputes must go to arbitration rather than our civil justice system. The justification for this is that arbitration saves the time and expense of working within our legal system. But here’s the thing: the corporations choose the arbitrators and every arbitrator knows they will never, ever, ever, ever (ever) get another job if they rule against the corporations. Never.
And guess what: 98.8% of arbitrations end up in favor of the corporations. This is not a surprise.
The Progressive States Network’s newsletter has a story about this today, Arbitration: “Set up to squeeze small sums of money out of desperately poor people”,
The headline above is a quote from former West Virginia Supreme Court Justice Richard Neely, describing what his role was as an arbitrator at the National Arbitration Forum (NAF), a for-profit company hired to enforce mandatory arbitration clauses for credit card consumer loans. “NAF is nothing more than an arm of the collection industry hiding behind a veneer of impartiality,” says Richard Neely.
In a devastating expose by BusinessWeek, Neely and other former arbitrators describe an arbitration system stacked completely against consumers– a system where creditors win 99.8% of all disputes involving companies ranging from Bank of America to Sears to Citgroup. Arbitration clauses buried in the fine print of credit card offers means consumers lose the right to have disputes decided in an independent court and instead are forced into corporation-selected arbitration firms.
The BusinessWeek story mentioned in the Progressive States Network story is titled, Banks vs. Consumers (Guess Who Wins)
This story about credit card companies taking unfair advantage of consumers is one more attack on citizen rights to access our own legal system (one more of so many attacks). Think about what is happening here. First the big corporations fought against “regulations” which are the rules that We, the People set up requiring safe workplaces or environmental standards, or products that do not injure people, etc. Then when fewer regulations of course resulted in worker or consumer injuries or toxic spills or other harms the inured parties filed more lawsuits asking the companies to make good. So in response to these lawsuits the corporate-financed “tort reform” movement came along, working to limit the ability of citizens to be compensated for the results of corporate bad behavior. The result has been fewer regulations preventing harms and more restrictions on citizen access to courts where we can seek damages after we are harmed.
I didn’t even bring up the corporate-conservative movement to install their own business-friendly judges in the courts.
But even those erosions of our access to justice has not been enough for the greedy corporations. Now there is arbitration: clauses that show up in contracts and agreements that remove your ability to take a dispute to the courts at all! And the judges in these courts are dependent on the corporations for their livlihood!
Deregulation, tort reform and now arbitration that is rigged against the consumer. Drip, drip, drip. One after another the big corporations are eroding the rights of citizens.