American Arbitration Association- Construction Super Conference 2014-
House Democrats reintroduce bill to restore consumers’ right to sue
By:   //  Arbitration

Senate House Democrats recently reintroduced legislation to protect consumers’ right to settle disputes with companies in court, according to The Hill.

“The Restoring Statutory Rights Act, which Sen. Patrick Leahy (D-Vt.) introduced with lead co-sponsor Sen. Al Franken (D-Minn.), would prohibit businesses from using forced arbitration against Americans for disputes arising under civil rights laws.”

“When Americans’ rights are infringed, they deserve their day in court,” Franken said. “Sadly, when big corporations insulate themselves from liability through ‘forced arbitration’ clauses — which are slipped into things like credit card agreements and employment agreements — they stack the deck against Americans who are trying to exercise that fundamental right.”

The legislation is Leahy’s response to a New York Times investigation that found companies are circumventing the courts by forcing consumers in fine print to settle disputes privately with an arbitrator chosen by the company, The Hill reported. The clauses often prohibit consumers from joining class action lawsuits as well.

When Congress passed the Federal Arbitration Act in 1925, Leahy said the intent was to give businesses an alternative venue to resolve their disputes.

“There is a valid role for arbitration when parties choose it willingly, after a dispute arises, as an alternative to court,” Leahy said. “But arbitration should not be forced upon consumers and workers through take-it-or-leave-it contracts they have no real choice but to accept.”

Prior to the New York Times story, the Consumer Financial Protection Bureau (CFPB) has had arbitration under the microscope, suggesting that the agency will propose changes that would limit the language in arbitration clauses so that consumers have more rights to seek court relief.

The proposed changes have sparked controversy as large organizations such as the US Chamber of Commerce oppose the proposal.

Arbitration clauses restrict the consumers right to go to court, instead forcing them to often costly arbitration. Studies have shown that consumers rarely win arbitration, and are often ordered to pay the legal fees incurred by the prevailing party. Courts rarely award legal fees.

Although the House bill could pass, the CFPB has the autonomous power to make changes to the way arbitration can be used.

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