Another Corporate Gimmick -- Arbitration

Does your credit card or bank loan agreement have an "arbitration clause?" More and more consumer-oriented contracts and "agreements" have clauses specifying that disputes must go to arbitration rather than our civil justice system. The justification for this is that arbitration saves the time and expense of working within our legal system. But here's the thing: the corporations choose the arbitrators and every arbitrator knows they will never, ever, ever, ever (ever) get another job if they rule against the corporations. Never.

And guess what: 98.8% of arbitrations end up in favor of the corporations. This is not a surprise.

The Progressive States Network's newsletter has a story about this today, Arbitration: "Set up to squeeze small sums of money out of desperately poor people",

The headline above is a quote from former West Virginia Supreme Court Justice Richard Neely, describing what his role was as an arbitrator at the National Arbitration Forum (NAF), a for-profit company hired to enforce mandatory arbitration clauses for credit card consumer loans. "NAF is nothing more than an arm of the collection industry hiding behind a veneer of impartiality," says Richard Neely.

In a devastating expose by BusinessWeek, Neely and other former arbitrators describe an arbitration system stacked completely against consumers -- a system where creditors win 99.8% of all disputes involving companies ranging from Bank of America to Sears to Citgroup. Arbitration clauses buried in the fine print of credit card offers means consumers lose the right to have disputes decided in an independent court and instead are forced into corporation-selected arbitration firms.

The BusinessWeek story mentioned in the Progressive States Network story is titled, Banks vs. Consumers (Guess Who Wins)

This story about credit card companies taking unfair advantage of consumers is one more attack on citizen rights to access our own legal system (one more of so many attacks). Think about what is happening here. First the big corporations fought against "regulations" which are the rules that We, the People set up requiring safe workplaces or environmental standards, or products that do not injure people, etc. Then when fewer regulations of course resulted in worker or consumer injuries or toxic spills or other harms the inured parties filed more lawsuits asking the companies to make good. So in response to these lawsuits the corporate-financed "tort reform" movement came along, working to limit the ability of citizens to be compensated for the results of corporate bad behavior. The result has been fewer regulations preventing harms and more restrictions on citizen access to courts where we can seek damages after we are harmed.

I didn't even bring up the corporate-conservative movement efforts to install their own business-friendly judges in the courts.

But even those erosions of our access to justice has not been enough for the greedy corporations. Now there is arbitration: clauses that show up in contracts and agreements that remove your ability to take a dispute to the courts at all! And the judges in these courts are dependent on the corporations for their livelihood!

Deregulation, tort reform and now arbitration that is rigged against the consumer. Drip, drip, drip. One after another the big corporations are eroding the rights of citizens.

Click through to Speak Out California.

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Comments

[NABNYC]

The legal system doesn't work that well and could stand a good overhaul. But we would need to be committed to providing our citizens with access to the legal system in order to want it to work. Since the powers that be want to privatize everything, and essentially pass one big law that says citizens have no rights, then you don't really need a civil legal system. Just criminal courts (do away with the juries) staffed almost exclusively with former prosecutors from the D.A.'s offices, which offices are mostly reserved for white males, the judge just shoots them up to prison where the privately-­constructe­d prisons run by the exceedingly well-compensated prison guards take care of everything. The legal system doesn't work very well.

Many judges now put in 20 years, get full retirement and benefits, "retire," then immediately become private rent-a-judges or private arbitrators at $500/hour, making $20,000/week in a private system only affordable to corporate America. And of course those judges just love the people paying them all that money (while they're also collecting the taxpayer-funded pension). The legal system doesn't work very well.

[DanBest]

Recently women who went to work in Iraq for companies like KBR and Halliburton were drugged and gang-raped by thier fellow workers. Because there is immunity for contractors in Iraq, there is no pathway to court or to some sort of resolution that would allow the accuser to conffont the accused. Instead these women were forced into mandatory arbitration where the records are not public.

Does anyone here believe that these animals that raped these women didn't know how easy it would be to escape any punishment for what they did? Take it a step further and it's not hard to imagine that the same group fo men are over there right now setting some new recruits.

The idea that an American citizen could be raped by other American citizens and not have a recourse to court is the worst perversion of justice that has occured in the last 8 years. These are Americans.

Mandatory arbitration is now used as an excuse to drug and gang-rape an American citizen and there's nothing you or I can do about it because the courts are okay with throwing even a crimminal case into arbitration and the justice department hasn't stepped in and done its job. We no longer have the ability to even hold KBR or Halliburton accountable for creating this environment.. Through binding arbitration they are giving the American people and the constitution the finger.

[joebaggadonuts]

Arbitration clauses are not binding against criminal prosecutions. The only thing they have going for them here is that it occurred on foreign soil in an occupation zone. A brave prosecutor should jump on this. Unfortunately, most of them were fired under Gonzalez.. IMPEACH.

[DanBest]

Although you are technically correct, mandatory arbitration is precisely what was used in the case of the young woman from Texas who was gang-raped. Because any crimminal prosecution is impossible in a war zone where contractors have immunity and the justice department won't do its job.

[darthdarcy]

We have to put and end to corporate "personhood" and return to regulations that protect the People..!

Otherwise we are just a corporate fascism and that is ruining not only our economy but also our very Republic..

[JBS]

If the corporation chooses a biased arbitration firm, then the arbitration firm itself should be legally liable. Just another deep pocket ...

[FogBelter]

Dave, I don't think US Corporations should have the right to an in-house Justice Department. The Arbitration clause should be an alternative method to be explored by the consumer at the time a dispute arises not mandated as a waiver of their Constitutional Rights.

This Arbitration Scam should be reviewed in the next Congress and abolished via Legislation if it is likely found to be an abridgment of Consumers Constitutional Rights. Legislation should be instituted, as well. to retroactively free the Consumer from the Arbitration Bond within the agreements they initially signed.

The Corporations will do all they can to turn the People into slaves, the People are Patriotically required to prevent the Corporations from doing harm to the Republic, just as the People would defend the United States of America from any other enemy usurper.

[dana94591]

This is nothing new. Many new ways to solve disputes are being used these days. Arbitration is not that scary. I think you are overreacting!!!

[DanBest]

Oh is that so? Please read my post above. Mandatory arbitration is being used in Iraq so that Americans who were gang-raped by other Americans will have no day in court. These are not innoivative ways towards dispute resolution. They are being used to keep damning evidence from ever reaching the public. Please, please get infomed about this issue, because if you are forced into arbitration, you have no recourse to the courthouse. No one should have to give up what we all know is a basic human right. It's not arbitration that is the issue, it is mandatory arbitration.