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Congress Rejects Ban on Arbitration Agreements

Despite plenty of evidence to the contrary, certain business advocates continue to insist that arbitration bans hurt individual consumers and employees more than they help them. They are not bothered by the facts, such as:

  1. Arbitration does not allow multiple plaintiffs to combine their claims into a class action or collective action. This effectively blocks consumer lawsuits from ever seeing the light of day because an individual’s claims are often smaller than the cost of filing a lawsuit or pursuing the dispute in arbitration.
  2. There is no explanation for why an arbitrator ruled the way they did and no opportunity to appeal the decision.
  3. The arbitration process is kept private, which means the results, and even a customer filing for relief for a complaint, are never made public. The transparent nature of the courts is an inherent ingredient to justice and accountability. By keeping all the proceedings private, other consumers with identical or similar complaints will not even know that they have a valid complaint.
  4. Arbitration is not always neutral. While some arbitrators have a good reputation for neutrality, others are less trustworthy, and many arbitration clauses give the company the power to choose the arbitrator. Because arbitration is a business, many arbitrators tend to be tempted to rule in favor of the side that brings them a lot of business.

Despite all these facts, and extensive research conducted by the Consumer Financial Protection Bureau (CFPB) showing how arbitration clauses harmed consumers, the U.S. House of Representatives and Senate both voted to overturn a CFPB rule that would prohibit banks from putting arbitration clauses in their consumer contracts.

An arbitration clause is a section of a contract that states that any legal dispute between the parties will be settle via arbitration, rather than the courts. Although arbitration was initially set up for disputes between businesses, companies have increasingly forced individuals into arbitration in order to escape accountability, and Republicans have repeatedly allowed them to do so. Republicans and Big Business advocates repeatedly point out that individuals who successfully file a claim in arbitration receive larger awards than in the courts, while blatantly ignoring the facts regarding the many, many more claims that never get a hearing at all as a result of forced arbitration.

Nevertheless, two Senate Republicans voted to uphold the CFPB rule, with Mike Pence casting the tie breaking vote to overturn the rule.

The White House issued a statement in favor of the Congressional decision, upholding the party line that the rule hurts consumers, rather than protecting them. Republicans continue to deny all the evidence that forced arbitration clauses hurt consumers, despite the CFPB’s extensive, nonpartisan investigation of the issue, which found that arbitration puts consumers at a huge disadvantage against companies like the banks that lobbied to overturn the CFPB’s rule.

Democrats, on the other hand, called the overturning of the CFPB rule a win for Wall Street and a loss for everyday consumers, even as the White House simultaneously claimed it was a win for everyday consumers.

Our Oak Brook, Illinois consumer rights private law firm handles individual and class action gift card, data breach, privacy rights, deceptive advertising, predatory lending, unfair debt collection, lemon law, and other consumer fraud cases that government agencies and public interest law firms such as the Illinois Attorney General may not pursue. Class action lawsuits our law firm has been involved in or spear-headed have led to substantial awards totaling over a million dollars to organizations including the National Association of Consumer Advocatesthe National Consumer Law Center, and local law school consumer programs. The Chicago consumer lawyers at DiTommaso Lubin Austermuehle are proud of our achievements in assisting national and local consumer rights organizations to obtain the funds needed to ensure that consumers are protected and informed of their rights. By standing up to consumer fraud and consumer rip-offs, and in the right case filing consumer protection lawsuits and class-actions you too can help ensure that other consumers’ rights are protected from consumer rip-offs and unscrupulous or dishonest practices.

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