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Public Citizen to Congress: Ban Forced Arbitration Clauses

WASHINGTON, D.C. – Today, the U.S House of Representatives Subcommittee on Antitrust, Commercial, and Administrative Law is holding a hearing on how forced arbitration clauses deny workers and consumers their right to access the courts if they are harmed by a corporate wrongdoer. The hearing comes on the same day that U.S. Rep. Hank Johnson (D-Ga.) re-introduced the Forced Arbitration Injustice Repeal (FAIR) Act, legislation that would ban forced arbitration clauses in employment, consumer, antitrust, and civil rights disputes. Remington A. Gregg, counsel for civil justice and consumer rights at Public Citizen, who submitted written testimony in advance of the hearing, released the following statement:

“There may be no more blatant example of how giant corporations like Wells Fargo, Equifax, Amazon, and Uber rig our economy than forced arbitration. Take-it-or-leave-it, fine print text requiring arbitration is hidden in most contracts as a get-out-of-jail-free card for companies that rip off, defraud, injure, cheat, discriminate against, harass, abuse, and violate the privacy of workers and consumers.

“In private arbitration, there is no judge or jury, and the right to appeal is severely limited. Arbitrators do not have to follow the law or precedent. Also, arbitrators often have a strong incentive to keep the company that chose arbitration happy because it is a repeat customer. And proceedings take place behind a veil of secrecy – ensuring that regulators, civil society watchdogs, the media and the public never learn about corporate crimes or widespread harm.

“Shockingly, individual consumers win in arbitration only 9% of the time, and in arbitrations against a financial company, the consumer ends up paying the company more than $7,700 on average, according to the Economic Policy Institute. Already, more than 60 million workers are forced into arbitration, and by 2024, more than 80% of private-sector, nonunion workers will be subject to it.

“We hope that this hearing will shine a bright light on the insidiousness of forced arbitration clauses and lead Congress to quickly pass legislation that will put an end to forced arbitration once and for all.”