As we have written on numerous occasions, in practically every contract for goods and services that a consumer is a party to there is a federal mandatory pre-dispute binding arbitration clause. As a result, if a person wants to obtain a credit card, enter a nursing home, purchase a car, or receive cell phone services, that individual must forfeit his or her constitutional right to go to court as a condition of obtaining that product or service. When a dispute arises about the product or service subject to the contract, a consumer is forced to enter a private, secretive, expensive, one-sided resolution system. But most consumers are either unaware that these clauses are in the contracts that they sign or they have no concept of the consequences of these clauses.
Over the years, Congress really hasn’t done its job when it comes to dealing with consumer-related arbitration. The federal arbitration was never intended by Congress – either when it was passed or later – to apply to consumer disputes. Finally, members of Congress are beginning to wake up to the overall problem. Legislation was considered in the last Congress to prohibit pre-dispute, binding arbitration agreements if the agreement requires arbitration of:
• an employment, consumer, or franchise dispute; or
• a dispute arising under any statue intended to protect civil rights or to regulate contracts or transactions between parties of unequal bargaining power.
Bills were also introduced to ban use of arbitration clauses in specific agreements, such as in nursing home contracts and automobile sales contracts. Unfortunately, none of these bills passed and became law. Despite success in raising awareness of the issues none of the legislation made it through Congress. The certainty of a Presidential veto had lots to do with the lack of progress in either chamber. With a new administration and increased Democratic majorities in both the House and Senate offering new opportunities for passage, however, these issues will receive renewed attention. All of our readers are encouraged to contact President Obama and their Senators and House members and ask for their full support.
Source: CFA News
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