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Some in Congress Push Changes to Forced Arbitration

An in-depth series in The New York Times may help a push to reform the forced-arbitration clauses in the fine print of many contracts. Photo by Dan Heyman
An in-depth series in The New York Times may help a push to reform the forced-arbitration clauses in the fine print of many contracts. Photo by Dan Heyman
November 5, 2015

CHARLESTON, W. Va. - In light of an in-depth investigation by the New York Times, some in Congress hope to protect people from what they say is slanted and abusive forced arbitration.

The Times found that fine print in many contracts means employees and consumers are signing away their right to sue without even realizing it. Minnesota Senator Al Franken says the clauses are in everything from cell-phone and credit-card contracts to employment agreements. He says the system works to tie the arbitrators to the corporations and erodes the constitutional rights of ordinary people.

"Everything you've seen in the New York Times is what this is about," says Franken. "It's about the right of people to go to court, to get to court. It's in the Constitution; it's in two amendments in the Constitution, in the Bill of Rights."

Corporations argue that binding arbitration is a way to avoid complicated, expensive legal battles. But Georgia Representative Hank Johnson says it works against the rights of ordinary people and won't make a corporation change its bad behavior.

"Forced arbitration restricts consumers' relief for disputes by limiting class actions, and the vast majority of consumers don't even know that they are subject to arbitration agreements," says Johnson.

One federal study that found one kind of consumer class-action case won more than $2.5 billion in relief for 160 million plaintiffs. During the same period similar consumers won fewer than a hundred arbitration cases out of more than a thousand they brought. And the study found those consumers received less than half a million dollars, but spent almost $3 million.

Linda Lipsen, CEO with the American Association for Justice, says forced arbitration hits consumers from cradle to grave in agreements with everyone from obstetricians to funeral homes.

"Hidden in the fine print of everything from credit cards and cell-phone contracts to nursing home admission forms and employee handbooks, forced-arbitration clauses are a free pass for corporations to steal and break the law," she says.

Franken says he is sponsoring legislation to reform arbitration.

Dan Heyman, Public News Service - WV