Consumer Law

Mandatory binding arbitration sucks (say 81% of Americans)

By Sam Glover

81% of Americans polled in a recent study commissioned by the U.S. Chamber of Commerce disapproved of mandatory binding arbitration. This is the corporation-friendly, tie-your-hands arbitration that is written into most of the consumer contracts we sign every day for credit cards, cell phones, etc.

So maybe it is time for Congress to get going and pass the Arbitration Fairness Act, which has apparently been languishing in the Senate since last December.

Why is it languishing? Because mandatory binding arbitration is big business for arbitration companies like the National Arbitration Forum and the American Arbitration Association, and for collection agencies like Wolpoff & Abramson, who bring tens of thousands of arbitrations each year.

Mandatory binding arbitration is not the cost-efficient arbitration that companies and consumers mutually agree on after a dispute arises. This elective arbitration is good, as long as everyone agrees to it.

But look for the National Arbitration Association and the American Arbitration Association to talk only about the positives of arbitration. Read carefully. Yes, many people support arbitration. It can be a very cost-effective alternative to the court system. But only when it is a real choice.

It can also be prohibitively expensive for the consumer. And it usually is where mandatory binding arbitration is forced on the consumer.

Mandatory binding arbitration is not a choice. It ties consumers’ hands in exactly those cases that may be better heard by a court, and subtracts many of the protections of the court system (like meaningful recourse if a defendant is never even served with a complaint). That, obviously, is why corporations love it.

Time to write your congressperson and urge them to put some fairness back into arbitration.

New Poll: Americans Say “No Thanks” To Binding Arbitration [Consumer Law & Policy Blog]

Full post as published by Caveat Emptor on May 27, 2008 (boomark / email).

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