The New York Times has published a devastating three-part exposé by reporters Jessica Silver-Greenberg, Robert Gebeloff and Michael Corkery showing the gory details of how corporations use the fine print of take-it-or-leave-it terms to deny consumer rights.
These forced arbitration clauses block ripped-off consumers from holding corporations accountable in a court. Instead, consumers are routed into the rigged system of private arbitration, where decisions are in the hands of corporations’ handpicked arbitrators instead of impartial judges. These arbitrators, who depend on the corporations who set these terms for repeat business, have every incentive to rule against consumers. Their rulings are final – they are not required to allow appeals. Appallingly, there is no public record of these decisions, and they do not have follow precedent or the law.
Even worse, forced arbitration clauses buried in the fine print increasingly ban class-action lawsuits. This makes these terms a “get out of jail free card” for corporations with large numbers of customers, who can get away with small-dollar rip-offs. Customers of a company that uses a forced arbitration clause to ban class actions have no means for collective action against unfair charges.
For years, Public Citizen has been in the forefront of the fight against forced arbitration. Attorneys in the Public Citizen Litigation Group represented consumers before the U.S. Supreme Court against the corporate interests that sought to use these hidden clauses as a way to deny consumer rights. Public Citizen research has exposed forced arbitration as the pro-corporate trap that it is. Public Citizen advocacy has pushed lawmakers and regulators to tackle the issue. And Public Citizen’s Forced Arbitration Rogues Gallery illustrates extent of the problem by listing corporations that use forced arbitration and offering a way for activists to blow the whistle when they discover these terms.
The New York Times expose adds momentum against the ongoing crisis of corporations using predatory terms to deny consumers their constitutional rights.
Part one of the Times series, “Arbitration Everywhere, Stacking the Deck of Justice,” explores the prevalence of forced arbitration in the fine print of terms for credit cards, cell phones, bank accounts, gift cards and even movie streaming services like Netflix. It tells the story of how a coalition of Wall Street insiders conspired to advance forced arbitration to thwart consumer attempts to hold them accountable – and the frustration of judges who are blocked from advancing consumer claims.
Part two of the series, “In Arbitration, a ‘Privatization of the Justice System’,” details the outrageous and heartbreaking attempts by consumers and employees who were victimized by corporations to use arbitration to hold those who wronged them accountable. It illustrates the wide range of circumstances and businesses where forced arbitration clauses are invoked – and how powerless individuals are once they’ve entered an agreement where forced arbitration is in the terms.
Part three of the series, “In Religious Arbitration, Scripture Is the Rule of Law,” which details religious groups’ use of forced arbitration to route individuals away from public courts and into alternative, religion-based judicial systems.
Altogether, the exposé offers a comprehensive and damning picture forced arbitration.
Thankfully, there are solutions. The Consumer Financial Protection Bureau is in the process of proposing a new rule to stop financial institutions’ from using this fine print to block class actions. And the Arbitration Fairness Act (S. 1133, H.R. 2087), a bill to end forced arbitration once and for all, has been introduced in the House and Senate.
Together, we can end forced arbitration. But we must act now.
Rick Claypool is the online director for Public Citizen’s Congress Watch division.