Consumers have been victimized by the usage of forced arbitrations to invalidate their claims and prevent the creation of large-scale lawsuits and class actions against corporations. This was backed up by the current arbitration laws of the United States. Now, a bill was introduced that would "fix" this oversight in the arbitration laws.
The Consumerist reports that a new bill was introduced by the US Senate. The bill outlines an exception to the Federal Arbitration Act, which lets individuals and small businesses enter into arbitration only after the dispute is filed. It will also give precedence to state laws, and restore the authority of critical State and Federal laws. George Slover, senior policy counsel at Consumers Union, says that the bill "restores the Federal Arbitration Act to what Congress intended - arbitration as a way for businesses to decide to handle their business disputes, but not as a way to insulate their misconduct from accountability to consumers."
The original bill was unveiled on Thursday, February 4, by Sen. Patrick Leahy and Sen. Al Franken. According to The Hill, the legislation is Leahy's response to an investigation conducted by New York Times. The investigation yielded evidence which reveals that large corporations have been found to circumvent court intervention by using fine print to force consumers to settle disputes privately with a private arbitrator provided by the company. This, in turn, prevents both consumers and employees from being able to joining class actions and lawsuits against the companies, since each dispute will be privatized.
The Leadership Conference on Civil and Human Rights has also petitioned to let the bill pass, citing that forced arbitration infringes on human rights and enables companies to disregard the law to their leisure. To quote: "Forced arbitration clauses are buried in the fine print of many legal documents (...) Once a claim is forced into arbitration, there is nothing requiring the arbitrator to follow the law in making his or her decision(...) "
The petition argues that forced arbitration disregards the civil rights of employees and consumers, and civil rights such as employee protection from race, gender, and age discrimination have been rendered meaningless. The petition cites one example where a pregnant employee was fired after a miscarriage forced her from working for seven days, which disregards the Medical Leave Act and the pregnancy discrimination laws of the state.
Other organizations have stepped up to aid in the effort to ban forced arbitrations. Last October, the Consumer Financial Protection Bureau started drafting rules to limit use of forced arbitrations to ban class actions within financial institutions, with several opponents trying to circumvent the effort along the way.
