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Feb. 12, 2009

Congress Must Level Playing Field Between Consumers and Corporations, Pass Arbitration Fairness Act

Statement of David Arkush, Director, Public Citizen’s Congress Watch Division*

With the re-filing today of the Arbitration Fairness Act, Congress again has the opportunity to empower victims of predatory, fraudulent and abusive practices. The Arbitration Fairness Act, sponsored by Rep. Hank Johnson (D-Ga.), would end the practice of forcing consumers, employees and franchise owners to sign away their rights to take disputes to court.

Most consumers don’t realize that when they sign up for a credit card, bank account, cell phone or any of numerous other services, they give up the right to take the service provider to court for wrongdoing. This is because the companies place binding mandatory arbitration clauses in the fine print of contracts to immunize themselves from accountability. These clauses require all disputes to go to secretive, private forums chosen by the company.

The Arbitration Fairness Act would allow all parties to a dispute to choose whether to go to arbitration or court.

There is little wonder why big business and the U.S. Chamber of Commerce oppose this bill. In many cases mandatory arbitration is akin to a rubber stamp for oppressive practices. Arbitration firms have a strong incentive to rule in favor of their clients – the corporations that choose them. Consumers in arbitration are stuck with costs far higher than those in court, and they must abide by the decision of arbitrators whose rulings are usually unreviewable by a judge, no matter how unfair they might be. As a result, many individuals lose the benefit of consumer protection and civil rights laws.

Congress should stand up for consumers and pass the arbitration bill. No company should be able to place itself above the law by stripping others of access to the courts. Consumers, employees and others who sign contracts deserve a choice on how they settle their disputes.

* Congress Watch is a department of Public Citizen. It is not a stand-alone organization. If you do not have space to include Mr. Arkush’s entire title, please refer to him as David Arkush of Public Citizen.

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