Arbitration Woes and Ancient Foes
Tuesday, April 19, 2016
Legal battles belong in an arena. According to ancient history (and the box office hit Gladiator), the wretchedly evil Roman Emperor, Commodus, used to fight weak and crippled opponents at the Colosseum, where all of the Roman people could spectate. Within the arena, Commodus would selectively spare gladiators who cowered and submitted to his greatness. By contrast, those he dueled behind closed doors were mercilessly slayed. Over time, the Roman public got sick of watching Commodus kill helpless people and animals at their expense, and successfully conspired to assassinate him. Seeing injustice occur repeatedly sounded a call to action that the masses could no longer tolerate.
The United States has long prided itself on borrowing the concept of the Roman Republic, where people directly participate in decision-making and policy changes. Yet, ironically, and to the average person’s disadvantage, legal disputes between consumers and businesses are often forced out of the public arena, into the private chambers of arbitration. We frequently sign this right away in contracts when purchasing cars, taking out lines of credit, purchasing products from online vendors, and applying for private student loans. Buried in the fine print, consumers who encounter problems and seek to challenge their contracts are blindsighted when told they cannot have their day in court. In general, people are in the dark about arbitration and how it limits their rights.
Last week, I had the privilege of discussing arbitration with students from a colleague’s government class at Montgomery College. After learning about how consumers regularly and unknowingly sign away rights to jury trials and class action lawsuits, they raised the important question: what can the average citizen do about this? Arbitration is tightly controlled by federal statutes and Supreme Court decisions, leaving an outraged populous feeling disengaged. The answer begins with consumer education.
Fortunately, three new sources have wedged open the door to the private forum, making consumer awareness more possible than in the past. First, in November 2014, scholars from St. John’s University School of Law released an empirical data study that showed the utter lack of awareness most consumers have about arbitration agreements. Next, in March 2015, the federal Consumer Financial Protection Bureau released a breakthrough report that, among many other things, analyzed and compared the outcomes of arbitration versus litigation. Spoiler alert: consumers fare much better in court. Finally, beginning in October 2015, the New York Times ran a provocative three-part series on arbitration, which highlighted case studies on how average people have been deceived and showed unfortunate results in arbitration hearings. All three sources provide ample data and compelling interviews that bolster the need for reform.
The United States has long prided itself on borrowing the concept of the Roman Republic, where people directly participate in decision-making and policy changes. Yet, ironically, and to the average person’s disadvantage, legal disputes between consumers and businesses are often forced out of the public arena, into the private chambers of arbitration. We frequently sign this right away in contracts when purchasing cars, taking out lines of credit, purchasing products from online vendors, and applying for private student loans. Buried in the fine print, consumers who encounter problems and seek to challenge their contracts are blindsighted when told they cannot have their day in court. In general, people are in the dark about arbitration and how it limits their rights.
Last week, I had the privilege of discussing arbitration with students from a colleague’s government class at Montgomery College. After learning about how consumers regularly and unknowingly sign away rights to jury trials and class action lawsuits, they raised the important question: what can the average citizen do about this? Arbitration is tightly controlled by federal statutes and Supreme Court decisions, leaving an outraged populous feeling disengaged. The answer begins with consumer education.
Fortunately, three new sources have wedged open the door to the private forum, making consumer awareness more possible than in the past. First, in November 2014, scholars from St. John’s University School of Law released an empirical data study that showed the utter lack of awareness most consumers have about arbitration agreements. Next, in March 2015, the federal Consumer Financial Protection Bureau released a breakthrough report that, among many other things, analyzed and compared the outcomes of arbitration versus litigation. Spoiler alert: consumers fare much better in court. Finally, beginning in October 2015, the New York Times ran a provocative three-part series on arbitration, which highlighted case studies on how average people have been deceived and showed unfortunate results in arbitration hearings. All three sources provide ample data and compelling interviews that bolster the need for reform.
Use these sources to activate your opinion. The other part of our democracy, the part that came from Greece, and lacks the blood and gore of the Colosseum, means that a democratic government (in theory) functions on participation and consent of the people. Our participation can take many forms. Voting is an obvious and direct option. With the 2016 presidential election looming, we should rise to the challenge of choosing a candidate who best engages and protects our consumer rights. Whether you are at the beginning of deciding whether this issue matters or are ready for battle, the most important thing you can do is take a side and step up to your role of being an informed voter.
Outside of voting, understanding that arbitration may be used to curtail your rights – and communicating with friends, family, and elected officials about how this is wrong – sends the message that this issue matters. Act as an informed consumer and reject arbitration clauses in your contracts. The momentum for arbitration reform has not come from inside the Colosseum, but thanks to the recent national efforts to increase transparency, the choice to mobilize against this assault on consumer rights is yours.