The Federal Arbitration Act was enacted in 1925 in order to allow businesses to settle disputes between themselves in arbitration, rather than in the courts. Arbitration is generally cheaper, faster, and easier, than filing a lawsuit, but businesses have expanded what they consider to be business disputes and now use mandatroy arbitration to settle disputes with their employees and even their customers.
It has become increasingly common for businesses to include arbitration clauses in all their employment contracts, as well as contracts with their consumers for everything from car loans to leases to credit cards. Because contracts are so long, many people don’t read them thoroughly before signing and aren’t even aware they’re signing away their right to sue the company in court in the event of a dispute. With small purchases such as cell phones or rental cars, the provisions are clearly take it or leave and consumers really have no choice. But with large purchase such as a car, the consumer has the option if careful to cross out the provision. Many car dealers may not want to lose the deal over arbitration and are relying on the consumer not reading the contract or knowing the consequence of agreeing to arbitration is giving up the right to go to court. Arbitrators are often more overly attentive to large corporations and even if they rule in the consumers favor “split the baby” and don’t provide a truly just result that is a more likely outcome if the case had been heard in court.
While the arbitration system may be beneficial to businesses looking to settle disputes with other businesses, it can put consumers at a severe disadvantage. The arbitrators are less likely to offer true justice as to get more business they don’t want corporations who appear routinely in arbitration to black ball them. There are reputable arbitrators who are known for being fair, but often the arbitrators don’t meet out real justice or well reasoned decisions in the consumer context. Once the arbitrator has reached a decision, there is no opportunity to appeal aside from a situations such as where a bribe was taken or the arbitrator acted well outside the scope of the law.
Arbitration also forbids consumers from forming a class to bring common complaints against a company. The class action lawsuit is a vital tool for many consumers as it allows them to bring many small complaints against a company in the form of one large lawsuit. Individual consumer complaints are often too small to warrant the cost of filing a lawsuit, which can cost thousands of dollars. Without the ability to file a class action lawsuit, many consumers will be left with no other way to hold a company accountable for illegal behavior that takes advantage of many consumers and benefits the company.
Consumers who have been made to sign arbitration agreements often file lawsuits anyway, asking the court to rule the arbitration agreement is invalid. Many courts in the past sided with the consumers in these cases, but recent Supreme Court cases have upheld these types of arbitration agreements, and made it very difficult to avoid arbitration.
In order to address this problem, two Democratic senators have introduced a bill that would limit the ability of companies to force their consumers into arbitration. The bill would give consumer protection laws, employment discrimination laws, and other civil rights matters more weight than arbitration agreements. The idea is to give individuals greater opportunity to bring companies to court and hold them accountable for their behavior towards consumers.
The bill would allow consumers to file a complaint against a company in court, even if they had already signed a mandatory arbitration clause with that company.
The proposed legislation further insists that the Federal Arbitration Act was never intended to revoke the rights of individual citizens to file a lawsuit in state or federal court against a company. Instead, the Act was meant only as a way for companies to settle their business disputes with other companies. The likelihood of this proposed statute passing now is small but as the truth about arbitration in the consumer and employment context comes out perhaps the pendulum will swing and such statute will pass.Our Chicago car fraud and Lemon law attorneys near Naperville and Lisle bring individual and class actions suits for defective cars with common design defects and auto dealer fraud and other car dealer scams such as selling rebuilt wrecks as certified used cars or misrepresenting a car as being in good condition when it is rebuilt wreck or had the odometer rolled back. We also see cases where new car dealers conceal that the car has been in accident while in their possession or used car dealers who put duck tape in back of the check engine light to conceal serious engine or emission problems. Super Lawyers has selected our DuPage, Kane, Kendall, Lake, Will and Cook County Illinois auto-fraud, car dealer fraud and lemon law lawyers as among the top 5% in Illinois. We only collect our fee if we win or settle your case. For a free consultation call our Chicago class action lawyers at our toll free number (877) 990-4990 or contact us on the web by clicking here.