Wednesday, September 16, 2009

Tax Relief Firm Requires Customers To Give Up Right To Sue And Arbitrate Disputes...IN CALIFORNIA!

We've all seen those ads for tax relief firms which promise to take on the IRS to eliminate or reduce your tax lien. CONSUMER WARNING: Be careful what you sign when you hire one of those firms. Recently, an Ohio customer hired Tax Inc., a nationwide tax relief firm, to handle an IRS matter. The customer signed an agreement which provided at the end:

Finally, any dispute in connection with any service performed by Tax, Inc. (a "Dispute") will be resolved by binding arbitration, pursuant to the rules of the American Arbitration Association ("AAA"), as the sole and exclusive manner in which such dispute may be resolved. I hereby waive my right to a trial by jury and consent to the County of Los Angeles, State of California as the sole and exclusive jurisdiction and venue for the arbitration. I hereby irrevocably waive, to the fullest extent permitted by law, any objection I may have now or hereafter have to such venue as being on inconvenient forum. Each party will bear its own attorneys' fees in connection with any proceedings regarding a Dispute. Any and all Disputes shall be governed by, and construed and enforced in accordance with, the laws of the State of California.

Apparently dissatisfied with Tax Inc.'s services, the customer sued for breach of contract in Ohio. Based upon this clause, Tax Inc is now claiming that the customer has no right to sue in Ohio, and the case must be arbitrated in Los Angeles, California!!!

I have no idea about the merits of this customer's complaints against Tax Inc. But if this one sided clause is upheld by an Ohio court, it means that dissatisfied customers are stuck with traveling to California for an "arbitration" of their complaints. How inconvenient is that? And that's the whole point of a clause like this: to make it so impractical and burdensome that many disgruntled customers will throw up their hands and cave in. It's yet another example of the unfairness of one sided, involuntary arbitration clauses, which are fully supported by the U.S. Chamber Of Commerce as "good for business." Not so good for the consumer. And as to the "fairness" of this clause, did you notice that it was only the CUSTOMER who waived the right to sue in Ohio or a right to a jury trial? The tax service waived nothing!

So if you're considering hiring one of these services, do the following:
1. Ask to see a sample contract BEFORE you sign anything;
2. If the agreement/contract contains an arbitration clause or other waivers of your rights, ask if these clauses are mandatory, meaning "take it or leave it;"
3. If waiving your rights is a "take it or leave it" proposition, leave it! Walk away from the deal, tell them why, and consider hiring a local service that won't send a potential dispute thousands of miles away.
4. If the service says "Just sign it as is and we'll take it out" or "don't worry, we won't honor that portion of the agreement," NEVER EVER agree to this.

No comments: