Investigative Report Reveals Arbitration Clauses are Interfering with Consumer Rights

A recent investigative report from the New York Times suggests that many contracts that consumers sign on a regular basis include severe and harsh provisions that effectively abolish the consumers’ rights to combat unfair and deceptive business practices. Most of these contracts are lengthy, complex, and difficult to understand, discouraging consumers from digging too deeply into the provisions and the impact of what they may be signing. Cell phone contracts are one of the most common examples of this type of contract, but they can also come with certain product purchases or even medical services.

The article discusses some specific examples involving credit card contracts, which impose an arbitration requirement on the signing party. Arbitration is a process that supplants the traditional judicial system and right to a jury. In an arbitration, the parties meet with a single, agreed upon arbitrator who is often a former lawyer or judge. The arbitrator’s decision is binding on the parties, and the parties are virtually precluded from bringing an action in court. In many cases, these arbitration requirement provisions will also specify the venue where the arbitration must take place, the set of arbitration rules that will apply, and who will be responsible for the cost of the arbitration.

As a result of these provisions, consumers who sign these contracts are often barred from bringing an individual action or class action. As a result, and as the report notes, many judges have started referring to these provisions as “get out of jail free cards” for big consumer products companies, who may not face the same liability in public backlash that they would otherwise receive if they were taken to court. Also, these arbitration provisions circumvent state consumer protection statutes, which are designed to provide consumers with a remedy for businesses’ unfair, fraudulent, deceitful, or misleading practices. These state laws are intended to protect consumers from large corporations who have substantial resources and all the bargaining power when it comes to these types of agreements.

According to the article, “lawyers for the companies talked about arbitration clauses as a means to an end. The goal was to kill class actions and send plaintiffs’ lawyers to the ’employment lines.'” In a 2013 ruling from the United States Supreme Court, the court stated that arbitration clauses could eventually circumvent or even outlaw class action cases, even if the class action mechanism was the only realistic format for bringing a lawsuit to remedy a widespread consumer harm. The court stated: “The antitrust laws do not guarantee an affordable procedural path to the vindication of every claim.”

If you or someone you know has suffered harm as the result of a company’s deceptive practice, fraud, or unfairness, you may be entitled to compensation. The dedicated and experienced product liability lawyers at Moll Law Group have proudly represented clients throughout the nation, including in Texas, Florida, New York, and Illinois. We know how devastating a product- or device-related injury can be for you and your family. We offer a free consultation to help you learn about the rights and remedies available to you. Call us now at 312-462-1700 or contact us online to set up your appointment.

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