Consumer Group Calls for End to Forced Arbitration

Public Justice calls on Senate to pass FAIR Act

In response to House passage of the FAIR Act — (Forced Arbitration Injustice Repeal), consumer group Public Justice is calling on the Senate to follow suit and take immediate action to protect consumers from forced arbitration clauses.

Public Justice Executive Director Paul Bland notes that forced arbitration clauses in contracts are ubiquitous:

Forced arbitration, however, is not just limited to the workplace. These clauses are also prevalent in consumer contracts, including “44 percent of checking account contracts, 53 percent of credit card contracts, 83 percent of prepaid credit card contracts, 98 percent of tuition agreements at for-profit colleges, and 99 percent of payday loan agreements.

Bland also notes a current application of forced arbitration involving a racial discrimination case at Tesla:

In fact, Tesla is currently fighting a class action racial discrimination case, arguing that it should be sent to arbitration. And in the wake of his case, Tesla has even imposed a forced arbitration clause on current and future contractors.

The bottom line: Forced arbitration means consumers and employees often lose their chance for a day in court.

In fact, the National Consumer Law Center (NCLC) notes:

These clauses deprive people of their day in court when a company violates the law, forcing victims into a system that is often biased, secretive and lawless. Forced arbitration clauses often contain class action bans that prevent either a judge or an arbitrator from seeing or addressing the full extent of a company’s wrongdoing. Forced arbitration frequently completely blocks any relief and operates as a get-out-of-jail-free card.

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