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Arbitration Clauses-What are you REALLY getting with your new purchase?

Posted By George Mossad, Wednesday, August 16, 2017

What am I talking about?  The fine print.  Yes, I’m talking about that small writing you probably didn’t read that came with your credit card or new phone.  Have you ever wondered what you’re agreeing to?  What if I told you that you were agreeing to shield the company you bought the product from, from any legal claims that could otherwise be rightfully brought in a court of law?  I’m talking about one single line in a large stack of small print documents - the arbitration clause.  Many companies today have included these clauses in order to avoid individual or class action litigation and media scrutiny. 

“What’s wrong with arbitration?” you may ask.  Nothing at all!  In fact, arbitration can be a very cost effective and time saving way to resolve a dispute.  The problem is rooted in the use of questionable arbitration procedures.  Many companies today are using arbitration clauses to circumvent the legal system which could benefit the consumer, and are instead subjecting consumers to in-house arbitration, and less than transparent decision making.

At the very core of arbitration and other dispute resolution techniques is the principle of neutrality.  Without a separate third party source outside the corporation (like NYSDRA or AAA), that neutrality is questionable.  On a regular basis, consumers around the world are being required to sign away their constitutional right to sue in a court or law, either individually or as part of class action lawsuits, and instead be subjected to the possibility of an unfair arbitration proceeding. 

In the past, many companies like AT&T, McDonald’s, Haliburton, and many others have attempted to enforce their clauses, some of which have been successful.  Most recently, SquareTrade filed motions to compel such arbitration against consumer plaintiffs. 

While the road might seem long ahead, courts have already begun to refuse to enforce these kinds of proceedings in an effort to safeguard individual constitutional rights. 

What can consumers do?  Read the fine print. Educate yourself on the topic (SquareTrade moves to compel arbitration in class action suit over protection plans;  No Arbitration For Halliburton Sexual Assault Case, Court Holds; Federal regulator moves to mostly ban arbitration clauses).  Support the use of arbitration and other dispute resolution techniques, but insist the processes are fair.  Talk to your representatives. 

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