Are Consumers Losing the Right to Sue?

Legal experts were joined by Senator Al Franken and Congressman Hank Johnson to highlight a NY Times investigation which concluded consumers are being stripped of their ability to file class-action lawsuits against more and more companies. Arbitration clauses, tucked away in the fine print, are the latest way companies are circumventing lawsuits and preventing checks on their illegal conduct. These arbitration clauses state that disputes regarding a specific product or service can only be resolved through privately appointed arbitrators, barring consumers from filing class-action lawsuits. According to Representative Johnson, forced pre-dispute arbitration is neither arbitrary nor fair. Johnson goes a step further, calling forced arbitration un-American.

More Consumer Protections Needed

Just last month, the Consumer Financial Protection Bureau announced they were considering rules which would prevent financial institutions and companies from barring consumers from filing class-actions suits and forcing them into arbitration. While admitting this is a step in the right direction, consumer advocates believe the CFPB and other consumer protection agencies should do more. After introducing the Arbitration Fairness Act earlier in November, Senator Franken says he has had difficulty securing Republican support for the Act. The proposed legislation would make forced pre-dispute arbitration agreements unenforceable. Rather than support this Act, Republican lawmakers are attempting to set even more limits on class action lawsuits from consumers.

Most Consumers Unaware of Arbitration Clauses

Consider this: On page 5 of a credit-card contract currently used by American Express, buried beneath a lengthy explanation about interest rates and late fees, is a clause most consumers probably skim right over. American Express explains in this clause that, should consumers have an issue with their account, American Express retains the right to resolve any potential claim through arbitration. American Express, along with countless others, has thus devised a way to completely work around ever having a class action lawsuit filed against them. Considering class action lawsuits are virtually the only tool consumers have to fight illegal or deceitful business practices, this is bad news for consumers. It has become increasingly difficult for consumers to apply for a credit card, obtain cable or Internet services, get a job, rent a car, shop online, or even sign up with a cellphone company without being bound by pre-disputearbitration clauses.

Class Action Suits Dismissed Due to Arbitration Clauses

Some of the potential class action suits which have been dismissed, due to the presence of an arbitration clause include: a travel-booking website accused of conspiring to fix hotel prices, mysterious charges which appeared on Time Warner customer bills; and African American employees of Taco Bell who claimed they were forced to work the worst shifts, denied promotions and subjected to demeaning comments. In essence, banning class action lawsuits and denying access to courtrooms through pre-dispute arbitration clauses has disabled consumer challenges associated with wage theft and discrimination as well as predatory lending. The move to block consumer class action lawsuits was led by credit-card companies and retailers and was backed by two Supreme Court rulings in 2011 and 2013 which upheld the ban on class-action suits in one-sided contracts. Few consumers were even aware of the rulings, and few consumers notice the arbitration clause in their contracts.

Once consumers realize they have been blocked from filing a class action lawsuit, most will drop their claims entirely once they realize how expensive arbitration really is, as well as how difficult it is to prevail in arbitration. If you are one of the many consumers who has suffered financial harm from an arbitration clause, it could be beneficial to speak to a knowledgeable attorney. In the meantime, show your support for the proposed Act which will protect consumers from fraudulent practices by big businesses.

Consumer Class Action Attorneys on Your Side

If you suffered harm due to deceptive financial practices, please contact the consumer class action attorneys at Golomb Legalfor your free case consultation. Consumers who have suffered because of a company's negligence or fraudulent behavior need an experienced and skilled consumer class action attorney on their side. To learn more about your rights and legal options, call the Philadelphia consumer class action lawyers at Golomb Legaltoday at 1-800-355-3300 or 1-215-985-9177 or fill out our confidential Contact Form.