Forced Arbitration Takes Away Consumer Rights

  • by

Chances are the last time you signed a contract for a new cell phone, a car lease agreement, a bank account, or even a new job, you unknowingly “agreed” to forced arbitration.

Forced arbitration takes away your right to sue a company in court. In these cases, consumers or employees are required to give up their right to sue as a part of the sales agreement or employment contract.

Let’s look a bit closer at what arbitration is, what forced arbitration is, and how this affects your consumer rights.

Forced Arbitration & Consumer Rights

When buying a product or service, we are often confronted with many forms to sign, and agreement and disclosures to “click.” These include disclosures of business affiliations, privacy statements, agreements, terms of the service, and product information.

However, buried deep in these forms and contracts is often a forced arbitration clause.

What does this mean exactly?

Let’s start with arbitration itself. Arbitration is the process of resolving disputes between two parties (often a consumer & a business or an employee & employer) outside of a public court. The two parties present their arguments to an arbitrator who then makes the final decision. The arbitration company is typically chosen in advance by the business (a repeat player with the arbitration company) and has often ruled in favor of the business before.forced arbitration

With forced arbitration, consumers are required to give up their right to sue if there is a problem with their product or service. This imbalance of power between consumer and business (or employee & employer) often leads to consumer protection & rights violations.

When one of these clauses gets enforced, that means that even if a consumer experiences mistreatment, harassment, or has problems with their product/service, their lawsuit will be forced into arbitration.

Peter Holland of the Holland Law Firm also explains that, “Forced arbitration is a process with no judge, no jury, and no right of appeal.” This puts consumers at a great disadvantage; often consumers find it difficult to even find attorney representation for the arbitration.  Read more on our website about this topic here.

Forced arbitration takes away consumer rights and puts consumers at a great disadvantage in the face of mistreatment. Thankfully, there is legislation in the works that would prohibit it.  In 2019 the United States House of Representatives passed the “Forced Arbitration Injustice Repeal Act or the FAIR Act”, with this purpose:This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute.”  The Bill has not yet become law, but there is hope.  Learn more here.

Need Help?

Learn more about forced arbitration and its effects on consumer rights in the December Issue of the Holland Law Firm newsletter.  While pre-dispute forced arbitration is an attack on a person’s right to have his or her day in court, the lawyers at the Holland Law Firm have defeated these clauses before, and have taken some cases to arbitration. 

If you feel like you’ve been forced into a corner and your rights have been violated, don’t give up. Give us a call.

The Holland Law Firm has years of experience fighting for Maryland consumers. Contact us and we can discuss your situation & outline a personalized plan of action moving forward.