There are matters that complement the core ideology of all political parties so well that lawmakers across the political spectrum should be working hand-in-hand to achieve the policies. The Arbitration Fairness Act and the Court Legal Access and Student Support (CLASS) Act, which would restore public’s rights to hold wrongdoing corporations accountable in court, are examples of exactly the kind of legislation that should transcend the partisan divide. And yet, partisanship has been a continuous roadblock to their implementation.
So let’s start by reviewing forced arbitration clauses and their devastating consequences for the constituents of all party affiliations. If you’re asking yourself, “What’s forced arbitration?” you’re certainly not alone. According to a recent study conducted by the Consumer Financial Protection Bureau (CFPB), three-quarters of respondents who understood the meaning of forced arbitration did not know whether their credit card contract contained a forced arbitration clause and a mere 7 percent of respondents whose credit card agreements did contain forced arbitration clauses correctly understood that they could not sue in court. These are startling findings considering that the CFPB’s study also found that the vast majority of prepaid card companies, private student loan lenders, and cell phone providers, and the list goes on, include a forced arbitration clause in their terms. These clauses block consumers’ access to public court and force harmed consumers into inherently biased and secretive arbitration proceedings as a condition for obtaining services.
And financial services consumers aren’t the only targeted group – most ordinary Americans are affected by arbitration clauses, as they are often forced upon employees, small businesses, nursing home residents, and college students, to name just a few.
Now, you may be asking, can arbitration clauses really be that bad? Well, forced arbitration:
1. Robs Ordinary Americans of their Hard-Earned Cash
The vast majority of forced arbitration clauses block the ability of harmed consumers to band together in class actions, the only economically effective way to bring small dollar claims. Even in cases with small sums of money, corporations can end up stealing millions. If a company unlawfully charges a $30 per month fee, or $360 a year for 10,000 customers, that’s $3.6 million in illegal profit. But, because it would cost far more than $360 for any one cheated customer to bring a claim, if the company’s arbitration clause prohibits class actions, it’s like a get-out-of-jail-free card.
As the party that argues taxes “reduce freedom” and has a history of being “tough on crime,” the fact that forced arbitration allows corporations to basically steal consumers’ money with impunity, should be a call to action.
2. Disenfranchises Elderly Americans
The alarming increase in the use of forced arbitration within nursing home contracts is an assault on one of our most vulnerable populations – elderly Americans. Nursing home residents and their families are frequently prevented from accessing the court system, even in claims associated with where severe harm and even death. In forced arbitration, consumers win far less often with significantly smaller awards than corporations. After a lifetime of work and giving back to the community, the elderly should be rewarded with a retirement lived in comfort and security. The closing of courtroom doors on older victims is simply unacceptable. As a party that attracts a large population of senior citizens and ardently asserts that this group deserves the utmost respect and dignity, conservatives should be standing firmly against forced arbitration.
3. Promotes Intellectual and Class Elitism
Arbitration clauses are filled with legalese and necessitate ordinary Americans to fully understand statutory and common law precedent before comprehending the consequences of such documents. It is pretentious and condescending to cater only to those educated in such matters while capitalizing on the ignorance of the many. Americans should not have to obtain advanced degrees in order to be able to make choices regarding their own financial matters.
Similarly, elitism pervades forced arbitration with its oftentimes outrageous arbitrator fees, motion fees and hearing fees that significantly deter ordinary Americans from pursuing their claims. Small businesses and individuals simply cannot compete with the financial means and legal prowess of large multinational corporations.
4. Takes Away Your Constitutional Rights
Conservatives often make it a point to defend the U.S. Constitution against efforts that could weaken or undermine our nation’s founding document. While the First and Second Amendments receive the most media attention, there should be an equal rush to activism with forced arbitration since it effectively abolishes the Seventh Amendment right to a trial by jury. The sweeping application of the Federal Arbitration Act in imposing forced arbitration has not only undermined the U.S. Constitution but is also an affront to states’ rights and their constitutions.
As a matter of fact, the British Crown’s denial of the right to a jury trial to colonials helped to spark the flames of the Revolutionary War, as bemoaned in the Declaration of Independence. The inclusion of the Seventh Amendment’s right to a jury trial in the U.S. Constitution was one of the most important pieces of legislation pushed by states’ rights advocates. Founding father, John Adams, even went so far as to say, “Representative government and trial by jury are the heart and lungs of liberty …”
5. Government Intrusion
Frequently the conservative argument is made that the government is attempting a take-over of the American populace. This takeover has already occurred in the form of forced arbitration as the government has allowed corporations to rip off Americans without recourse and is depriving them of constitutional rights all without their proper knowledge and consent. And, with increasingly greater accumulations of wealth, corporations have bought out elections and now effectively “own” most of your elected officials, successfully overturning the prized republic that our country was intended to be.
As illustrated above, forced arbitration leads to disastrous outcomes for the constituents of all political parties.
Dean Clancy poignantly captured this notion in a U.S. News article, “The issue should be a no-brainer for conservatives. Ending the un-American practice of forced arbitration should be on the agenda, not just of traditional consumer advocates, but of everyone who loves liberty and the Bill of Rights … [it’s] a freedom issue.”
So, what can you do about this?
The Arbitration Fairness Act and The CLASS Act have both been introduced in the Senate and the House of Representatives will be considering both — the former bans arbitration clauses in consumer, employee, and civil rights and certain antitrust cases while the latter eliminates these clauses from college enrollment agreements. Urge your members of Congress to support both measures and then spread the word.