OLATHE, Kan -- When you make a big purchase, you're probably waiving your right to sue and you may have no idea. It's called mandatory binding arbitration. And it's under attack from consumer groups.
From opening a credit card, to buying a car or home -- the fine print probably talks about arbitration. It's a way to resolve a dispute outside the courts. It's something Chad Franklin Suzuki customers learned first hand. When they wanted to settle their claims against the dealership and its advertising campaign, some consumers found themselves in arbitration and not a courtroom.
Companies believe it's cheaper and quicker to resolve problems than multiple lawsuits in court. It's a practice that could change under the Arbitration Fairness Act of 2009. Congress is debating the act that would bar companies from forcing customers into arbitration before they could take their case to court.
While that case is debated in Congress, Bank of America and JPMorgan Chase already announced changes. They're taking arbitration out of their credit card agreement.
"I think that with this first major change it will trickle down to all aspects of financing," Jana Castanon of Apprisen Financial Advocates said.
The Minnesota Attorney General also took action against an arbitration group alleging deceptive business practices. In a 2007 report,
Public Citizen analyzed 19,000 cases and found the arbitration group (National Arbitration Forum) ruled
94-percent of the time for the company and not the consumer.
Some groups have tried to discredit that accounting. Professor Peter "Bo" Rutledge, of Catholic University Columbus School of Law, did his own analysis and believes Public Citizen's study "is wrong, both on the facts and in its ultimate conclusions."
The Institute for Legal Reform, which is an affiliate of the U.S. Chamber of Commerce, believes arbitration has advantages over filing lawsuits. A survey released by the group, claims 71 percent of voters opposes Congressional efforts to remove arbitration agreements.
“With arbitration out of the way, they can bundle hundreds of thousands of cases together into class action lawsuits, reaping huge fees for themselves—but only pennies on the dollar for consumers,” said Lisa Rickard, President of the U.S. Chamber Institute for Legal Reform.
Before you buy any product, read the fine print so you know your rights before there's a problem.
