Posted by Gary Ricin on 10/29/07

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...Seems like there might be hope on the horizon. Please
call your reps and let them know that you support
Feingold's bill.

"Statement of U.S. Senator Russ Feingold
At a Press Conference with Public Citizen on Protecting
Consumers from Unfair Credit Card Contracts

September 27, 2007

Good afternoon. I’m pleased to join my friends from
Public Citizen in announcing the release of this eye-
opening report. The report provides solid evidence of the
abuses that take place when consumers are forced into
binding mandatory arbitration agreements.

Arbitration is often touted as a more efficient and less
expensive alternative to litigation. That can certainly
be the case, but only in situations where both parties
freely choose arbitration on terms that ensure a level
playing field. Unfortunately, more and more companies are
requiring people to enter into binding mandatory
arbitration agreements as a condition to obtaining a job,
a credit account, or a franchise. The practice is so
widespread, and individual consumers or employees have so
little bargaining power in these transactions, that they
are effectively forced to accept a mandatory arbitration
clause.

The problems with forcing arbitration on consumers and
employees are made crystal clear by this report. The most
glaring problem is that the playing field in these cases
is anything but level. An arbitration firm that receives
millions of dollars in repeat business from a company has
a powerful incentive to rule in the company’s favor. And
that is exactly what happens in a shocking percentage of
cases. We learn in this report that one arbitration firm
in California ruled in favor of credit companies in 94
percent of the disputes it resolved. Few consumers would
voluntarily choose arbitration when faced with those odds.

Consumers who lose their arbitrations have little
recourse. Courts are allowed to reverse an arbitrator’s
decision only in the most egregious cases. The mere fact
that the decision was wrong is not a sufficient basis for
appeal. That makes it easier for arbitrators to interpret
laws in a way that favors the companies who are giving
them repeat business. Mandatory arbitration clauses thus
threaten to undermine the statutory protections that
Congress has so carefully provided for American workers,
investors, and consumers.

Fortunately, there is a solution, and this report points
the way. We need to restore choice to the consumer, and
we can do that by enacting legislation that prohibits pre-
dispute arbitration clauses in contracts between parties
with unequal bargaining power. In July of this year, I
introduced legislation, the Arbitration Fairness Act of
2007, that would do just that. The legislation is
cosponsored by Senator Durbin and it has been introduced
in the House by Representative Hank Johnson from Georgia.
Under our legislation, contracting parties would still be
allowed to choose arbitration, but that choice would have
to be freely made after the dispute arises. It would no
longer be presented to the consumers as a precondition of
doing business – an offer they cannot refuse.

This will help in two ways. First, it will enable to
consumers to exercise their right to go to court, if that
is the route they choose. Second, if consumers have the
right to decline arbitration, arbitration firms that
simply rubber stamp the actions of companies may find
themselves out of business. This legislation will
ultimately make arbitration a more fair and desirable
option.

I hope that Public Citizen’s excellent report serves as a
wake-up call. It’s time to restore choice to consumers
and employees, and restore the effectiveness of the laws
Congress has passed to protect them. Thank you."

SOURCE:
http://feingold.senate.gov/~feingold/statements/07/09/20070
927mb.htm

Re: Mandatory Binding Arbitration Under Attack, 10/29/07, by Gary Ricin.

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