Mandatory Binding Arbitration--Saying Goodbye To Your Rights.

Signing up for a credit card. Building a house or adding on to it. Buying a car. Putting a loved one in a nursing home. Buying a computer or even a new computer battery (my own personal experience). The list goes on and on. Everywhere we turn, companies, builders, and even medical providers are jamming fine print, mandatory, binding arbitration clauses in consumers' faces. In the vast majority of cases, consumers have no choice: either agree to the clause, or no deal. Just try to bargain out of these one sided clauses when you buy a credit card or sign with a home builder and see what happens.

The reason is simple: corporate America wants to bypass the court system and your right to seek redress for any ripoffs, fraud, defective products, etc. This is a rigged game, as a recent NPR report illustrates.

My own experience with "binding arbitration" is 100% consistent with this report. In a simple defective concrete driveway dispute with a builder, my client was forced into binding arbitration. The costs and fees were HORRRENDOUS and because the dispute was under $10,000, we were not even allowed a simple hearing. Under this "system," the arbitrator (who was charging over $300 per hour as I recall)was to "decide" the case based solely upon a "document review." Sounds fair, eh?

These arbitration clauses are a joke and corporate America knows it. The system reminds me of the dictator who announces that "you will be given a fair hearing, and then you will be taken out and shot!"

There is a movement right now in Congress to reform this railroading and make binding arbitration VOLUNTARY, meaning that you as a consumer are free to agree to it, or politely decline it. But the credit card companies are fighting it tooth and nail. These are the same benevolent folks who are looking to strap on additional fees to customers who pay their bills on time in response to the recently passed, consumer friendly "Credit Card Bill of Rights."

If you think these clauses are fair and should continue, check this out. In 2000, auto dealers swarmed on Washington complaining that auto manufacturerers were bullying them and they needed legal relief. Why? Auto manufacturers were inserting mandatory, binding arbitration clauses into their franchise agreements. Auto dealers wanted to retain the right to sue in court when it came to protecting their corporate interests with manufacturers.

So here's the lesson: when these one sided clauses are used AGAINST corporations, they're bad and need to be excised. But when they're used by corporate America against CONSUMERS, they're wonderful and cost effective "dispute mechanisms."