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Leveling the Scales of Justice: The Fight Against Forced Mediation

Consumer advocates are speaking out against so-called forced arbitration clauses in contracts. Credit: Chris Potter/Flickr
Consumer advocates are speaking out against so-called forced arbitration clauses in contracts. Credit: Chris Potter/Flickr
November 9, 2015

INDIANAPOLIS – In the wake of a New York Times exposé, consumer advocates are speaking out against the corporate practice of putting so-called forced arbitration clauses into contracts – saying they put victims of fraud at a major disadvantage.

The clauses say if wrongdoing is alleged, people have to go to mediation rather than to court.

The clauses are widespread – tucked into the fine print for credit cards, loans, cable contracts, doctor visits, online sales and even nursing homes.

Elise Sanguinetti, secretary of the American Association for Justice and the president-elect of the Consumer Attorneys of America, says there's a lot people can do to fight back.

"First is to pressure their elected officials to pass the Arbitration Fairness Act, and demand that the Consumer Financial Protection Bureau issue rules to ban forced arbitration in financial contracts,” she advises, “and that the Centers for Medicare and Medicaid ban forced arbitration against nursing homes."

Supporters of mandatory arbitration say it cuts down on frivolous lawsuits.

U.S. Sen. Al Franken of Minnesota reintroduced a bill to ban forced arbitration clauses in certain contracts earlier this year, but it hasn't come to a vote.

Franken says he wants to stop corporate interests from taking advantage of consumers, many of whom don't realize they've signed away their rights.

"These guys are bad guys,” he states. “And it's about the right of people to go to court. It's in the Constitution. It's in two amendments in the Bill of Rights."

The Times investigation found that four out of five federal cases that went to arbitration from 2010 to 2014 were decided in favor of the company. And it found that a coalition of credit card companies and retailers has been strategizing for a decade to block class action lawsuits.



Mary Kuhlman/Stephanie Carson, Public News Service - IN