Video: What You Need To Know About Mandatory Arbitration
You may have heard a lot in the news about arbitration clauses in consumer contracts. To help us learn about the topic, Michael J. Swanson, author of How David Beats Goliath and the CEO of Advocate Captial, interviewed Larry Bodine, Editor in Chief of PersonalInjury.com.
Mandatory arbitration clauses appear in cell phone contracts, nursing home contracts and bank checking account agreements. They are usually bured in the boilerplate. It will say if you have a dispute with the company, you must take it to arbitration and you give up your right to take it to court.
The clauses are an effort by the big banks and corporations to suppress legitimate claims and to make sure that if there is a dispute, the consumer loses. The government did a study of 1,061 arbitration cases and found that consumers won only 7% of the cases. The corporations won all the other cases, so you can see why Big Business prefers them.
Arbitration puts a consumer in a black box. The hearings are private, there is no public complaint and the decision is almost impossible to appear. 75% of consumers said in a survey that they were completely unaware of arbitration clauses in their consumer contracts. In fact, Larry found an arbitration clause on page 7 of a 22-page contract for his cell phone agreement, buried in fine print.
- Read Larry's original article: Ban Arbitration Clauses in Consumer Contracts NOW
- Sign the petition to ban arbitration clauses in consumer clauses.
Consumers can protect themsleves by asking the company if there is an arbtitration clause in the agreement and refuse to sign it -- or cross it out. If the company refuses, find yourself another bank, lender or cell phone company.