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Greg Webb
Greg Webb
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Did You Sign Your Rights Away Today? Arbitration: Read The Fine Print

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No one really wants to start a lawsuit or end up in court. We want to buy a product, contract for a service, do our job and go about our day safely. The general assumption is that things will go smoothly. So we relax, safe in the knowledge that justice can be obtained, if needed.

Ladies and gentlemen, have you read the fine print lately? You may no longer have the right to go to court if something goes terribly wrong. A 2008 study conducted by the University of Michigan’s Journal of Law Reform studied 21 major corporations and found that 93% of their employment contracts and 77% of their consumer contracts contained compulsory arbitration clauses. Sign and you’ve waived your right to a court hearing and agreed to go through their arbitration process.

Arbitration means that the two parties, the corporation and you, agree to allow a "neutral" third party to help resolve their conflict. It’s supposed to be cheaper, faster, and less complicated than going to court. But, over the last 10 years, rulings at the Supreme Court level have sided with big corporations and arbitration has become more prevalent and less ‘neutral’. Arbitrators may be appointed at the will of the corporation and are not obligated to comply with any rulings or legislation. The concept of fairness has vanished. And, appealing the arbitrator's ruling is extremely difficult.

In 2007, Public Citizen took a look at National Arbitration Forum (NAF) lawyer, Joseph Nardulli of California. In one day Nardulli settled, or disposed of, 68 cases. All cases were bank related and in every case, all 68, he ruled in favor of the bank. How could that happen? NAF calls them ‘document hearings’, but there is no hearing. There is no testimony; most of the time the parties involved aren’t even present. This is a case of one man reading, theoretically, all the documents and making a decision.

Some Consumer Options When Faced With the Arbitration Clause

It feels unjust and it is. The concept of forced or Binding Mandatory Arbitration (BMA) can be viewed as a violation of the Seventh Amendment.

Your first step is to thoroughly read the contract before you sign. If you don’t like what you read, get up and walk out—go find another business, another bank, or another credit card that isn’t restricting your rights. It may be difficult to do, but it’s worth looking. Alternately, you can strike through the arbitration language on the contract, sign the contract, and send it back, which modifies the agreement in the signatory’s behalf. If the matter is extremely important to you, your best option may be to consult with an attorney experienced in commercial litigation. Spending some money up front in this fashion may save you money later on.

If you find yourself wronged by a corporation, and you are not bound by a BMA, you can file in small claims court, where you can hire a lawyer and have your case heard by a judge, not a private sector arbitration professional.

There are organizations that help consumers facing arbitration. Citizen Works (www.citizenworks.org), Public Citizen (www.citizen.org/arbitration), the National Consumer Law Center (www.nclc.org) and Public Justice (www.publicjustice.net) are groups that provide information and resources for citizens who need help in the face of forced arbitration.

As a citizen you can take on corporate wrong doings, but the initial burden is on you to read the fine print and say no to binding mandatory arbitration.