As U.S. consumer protection laws have grown steadily for more than a century, consumers have come to take for granted their right to bring suit against businesses that use unfair practices or sell shoddy or dangerous products, or who provide services that turn out to be less than promised.
After all, the Consumer Bill of Rights brought about by congress in 1962 at the urging of President John F. Kennedy established broad, much-needed consumer rights. Then, in 1985 the Consumer Bill of Rights was expanded to include – among a number of new provisions – a consumer’s right to redress, that is, to take legal action against unscrupulous businesses.
While these rights seem common sense and unassailable, over time businesses found a way to prevent consumers from seeking fair treatment through the courts.
It’s in the Fine Print
A consumer’s right to redress seemed unassailable when the Consumer’s Bill of Rights was expanded. But over time, businesses found a way to keep dissatisfied consumers from having their day in court.
They accomplished this by getting consumers to sign away their rights to redress. In contracts for many products and services, including call phones, cable service, credit cards, nursing homes, bank and student loans, apartment leases and even employment, many businesses included a clause which stated that the consumer waives the right to bringing the business to court, and instead agrees to settle any dispute with the business through arbitration.
A typical customer doesn’t read the fine print before signing for example, a cell phone contract. And if a customer does see a clause agreeing to settle any dispute through arbitration and doesn’t agree to surrender the right to take the cellular provider to court, then the customer would not be able to get service through that business.
Arbitration isn’t Bad, is it?
Unfortunately for consumers, arbitration has significant differences from court, differences which usually benefit the business and not the consumer.
For example, arbitration can be done in secret with no public rulings. Arbitration lacks effective judicial review, which means if a consumer loses in arbitration he or she cannot turn to a higher court to appeal the decision. Discovery, the legal process in which the opposing litigants exchange information (evidence) before the trial, is greatly limited in arbitration. Businesses can also decide where the arbitration will take place, what the ground rules for the arbitration and who will be responsible for the costs of arbitration.
All of this means the legal safeguards that provide a fair, impartial and accessible courtroom process are not in effect in an arbitration. And this in turn means businesses can tilt the playing field in their favor once the consumer has signed the contract agreeing to waive the right to sue.
Arbitration is Avoidable by Just Saying “No” Right?
As these provisions became widespread in purchase and service contracts signed by consumers, finding goods and services that did not require a consumer to waive their right to sue became increasingly difficult.
And if a consumer refused to sign the sale or service contract, the business would simply decline to sell the item or provide the service. That may not sound like a problem, but when an entire industry is requiring consumers to sign these agreements, well good luck getting a cell phone. Or an apartment. Or a student loan.
So while no one was forced to agree to arbitration, as a practical matter not agreeing became nearly impossible as these waivers became almost universal.
A FAIR Solution
Recognizing the reduction in legal protections inherent with these agreements, congress has taken action. The Forced Arbitration Injustice Repeal (FAIR) Act would eliminate pre-dispute contracts or clauses in which consumers forfeit their right to resolve a dispute with a business and agreeing to instead to go arbitration. First introduced in 2019, the FAIR Act bill was reintroduced to congress on February 11 of this year. Should the FAIR Act bill be passed and signed into law, the practice of forcing consumers to surrender their Seventh Amendment Rights to redress in court would end, greatly increasing consumer protections.
Know Your Rights as a Consumer
Consumer rights and protections regularly face threats on many fronts. If you feel you have been treated unfairly by a business, it’s important to stand up for your rights and seek experienced and effective legal help. Contact the Law Office of Richard S. Cornfeld today for a complimentary consultation.