Re: Mandatory Binding Arbitration Under Attack

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Sounds good. -- Arbitration can be a fair and economical way
to handle many disputes. However, officious arbitration
organizations that purport to be fair and impartial forums
but are actually rubber stamps give the concept of
arbitration a very bad rap.

On 10/29/07, Gary Ricin wrote:
> ...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
>