Consumer: Public Organizations Fight Mandatory Pre-dispute Arbitration Clauses (Web)

Consumer: Public Interest Organizations Band Together to Fight Mandatory Pre-dispute Arbitration Clauses in Consumer Contracts.
 
A group of more than two dozen public interest organizations have begun a campaign to stop the use of binding mandatory arbitration (BMA) clauses in consumer contracts.  On February 24, 2005, the groups gathered in Washington, D.C. for a press conference where they launched the effort, releasing a 10-point platform for action. The campaign will utilize two educational web sites and a campaign to encourage consumers to boycott companies that use BMA clauses.
 
“We are starting a campaign to stop the use of binding mandatory arbitration clauses, which Big Business is now forcing on unknowing consumers in billions of pre-printed, take-it-or-leave-it contracts as part of its larger push to avoid oversight and accountability for fraud and deception,” said Joan Claybrook, president of Public Citizen, a member organization. “It is galling that corporations are systematically denying individuals their right to go to court.”
 
At one of the websites, www.givemebackmyrights.com, the coalition states as its objectives:

  • To raise consumer awareness about the dangers of binding mandatory arbitration;
  • To push for remedial legislation at both the state and federal levels; and
  • To highlight companies that do not require binding mandatory arbitration clauses.


 The other website, www.callbeforeyoubuy.com, deals with the use of BMA clauses in contracts to purchase vehicles. This site says that its purpose is to inform consumers about binding mandatory arbitration clauses, and to give one simple piece of advice:

“Call before you buy.” Before wasting any time visiting a dealership or dealership web site, simply call the dealership and ask this: “Does your dealership require me to sign any type of binding arbitration clauses?” If the answer is yes, stay away from that dealership. Tell your friends to stay away from it, too.
 
The groups plan to conduct a campaign to let consumers know which companies don’t use BMA clauses. Specific points of the coalition’s platform include encouraging consumers to close credit cards that have BMA clauses, encouraging homebuyers seeking mortgages to avoid lenders that use BMA clauses, urging consumers to avoid auto dealers and auto financers that use BMA clauses, and calling for credit card companies and auto dealers to remove BMA clauses from their contracts. The organization will provide bill stuffers for consumers to send with their payments to repudiate BMA clauses and will urge large membership organizations to insist that partners providing services to their members, such as credit card and mutual fund companies, remove BMA clauses from their group contracts as a condition of offering products to their members.

On the legal front, the coalition plans to conduct a nationwide campaign promoting the passage of model state laws limiting the use of BMA clauses and to call for congressional hearings on BMA clauses and for legislation prohibiting BMA.
 
Public Citizen cited several ways in which they claim BMA clauses threaten the rights of consumers, including the disproportional position they hold against companies who are often repeat players in arbitration, the tendency of arbitrators to ‘split the difference’ for a lower final award,  and the lack of legal accountability in arbitration. Lack of reciprocity and the  ability of companies to dictate all terms of BMA clauses were also cited as violations of consumers’ rights.
 
The Public Citizen press release can be read online at: http://citizen.org/pressroom/release.cfm?ID=1884.
 
 
Keywords: Arbitration, Clauses