End Unconstitutional Mandatory Arbitration Clauses
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What is a mandatory arbitration agreement? It is an important question because you have almost certainly signed one, yet many people have no idea what they are. They are included in all cell phone contracts, banking contracts, investment companies’ contracts, credit card contracts, and assisted living contracts. So what are they?
In a nutshell, a mandatory arbitration agreement is a portion of a contract that states that if the consumer has a disagreement with the company or provider, they must resolve their dispute in arbitration rather than in court. Arbitration means that the case will be heard and decided by a hired arbitrator rather than a judge and jury. Sounds innocuous, helpful even. Who would rather go to court?
But there is quite the catch. The arbitrators presiding over these claims work for a company which frequently does business with the defendant company. Thus, the arbitrators predictably rule in favor of said company. They have no accountability or oversight. They do not need to follow the law. They don’t need to give any explanation for their decisions. Their rulings cannot be challenged or appealed in any way. They are expensive, frequently costing more than litigating, and the consumer usually bears that brunt of those costs because the consumer usually loses.
If that doesn’t make you mad, I don’t know what possibly can.
Now, I want to clarify that arbitration is a perfectly acceptable dispute resolution method if both the plaintiff and the defendant knowingly agree to it. For example, cases between two companies can be arbitrated to avoid bad publicity or keep unimportant cases out of court. Both parties understand how arbitration works and knowingly choose to arbitrate rather than go to court. That is not what happens in most contracts that include mandatory arbitration agreements. These contracts bury the clause deep inside the fine print. They are predicated on the idea that most consumers do not have the time to read the entire contract; therefore, most people have no idea that they have signed away their right to a trial by jury. And even if they do, mandatory arbitration clauses are so ubiquitous that the customer really has no other choice.
I know this from personal experience. I was attempting to open accounts with both Fidelity and Vanguard. I realized that both contracts contained mandatory arbitration clauses. I have gone through the contracts of Tradeking, TD Ameritrade, Charles Schwab, Etrade, Fidelity, Scottrade, Vanguard, and many more. Every single brokerage company has a contract which contains a mandatory arbitration clause. Simply ask me and I will be happy to direct you to the applicable sections of each and every contract. So my “choice” to use a different company is not a choice at all. I am forced to either sign one of these contracts or keep my money under my mattress. This is absolutely ridiculous.
My personal anecdote doesn't end there. I've applied for a credit card; I've gotten a new job; I've downloaded and played Mobile Strike. Each contract (even Mobile Strike) has a mandatory arbitration agreement.
The idea is to force every customer to sign an agreement which rids the company of any accountability for their actions, regardless of their egregious nature. These “gotcha” clauses exist for the sole purpose of denying consumers their voice. They also typically prohibit class-action lawsuits. Class-action suits are the most powerful way consumers have to hold big businesses accountable. Contracts which prohibit them through forced arbitration deny us of that right.
The seventh and fourteenth amendments show us something. They unequivocally state that there is truly one way in which all Americans are equal. We are all the same in the eyes of the law. We all deserve our day in court. We have the right to sue corporations, businesses, and individuals who have abused us. We have the right to file suit on behalf of not just ourselves, but every other person who has suffered a similar damage. These cases are the engines of change against the seemingly unstoppable workings of corporations and powerful individuals. These cases are what enable people to protect themselves. But this mechanism of change is predicated on the jury. The jury is a group of twelve people who are carefully selected to take time from their lives to serve the public good. They are ordinary citizens who seek only to make sure that the right decision is made. Their only concern is the betterment of the common good. Without them, the system is worthless. A further necessity is the appeals process. It is insurance should the jury make the wrong decision. The appeals courts exist to ensure that mistakes are corrected when they are made. Both facets are crucial to ensuring a fair system of justice. And both facets are lost in mandatory arbitration. An arbitrator is not an ordinary citizen. They are not held accountable for their decisions. They don’t even need to follow the law in making their decision. And every single one of us is forced into this system by mandatory arbitration agreements. This must change.
The only feasible method of redress is for the federal legislature to take action. Both a House and Senate bill already exist to fix this problem. House Bill 2087 – The Arbitration Fairness Act of 2015 and its identical copy, Senate Bill 1133, were designed with this exact purpose in mind. Their text states that “no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute” and that “the validity and enforceability of an agreement to arbitrate shall be determined by a court, under federal law, rather than an arbitrator.” Both were sent to committee to die a while ago. Here is where you can make a difference.
I created this petition to force this issue to be taken seriously. Long speeches and letters mean much less than names on a petition. We will remind Congress why these bills were created and why they need to be passed. I will continue to write my representatives, who are among the listed recipients of this petition, and every name on this petition adds to the strength of our demand. To further our cause even more, you simply need to send your Representative and Senators a brief letter or give them a call. Simple actions can have a massive impact on the opinions of those we have chosen to represent us. I appreciate you taking the time to read this and to make a difference in protecting our rights.
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