Mandatory binding arbitration sucks (say 81% of Americans)

81% of Americans polled in a recent study commissioned by the U.S. Chamber of Commerce disapproved of mandatory binding arbitration. This is the corporation-friendly, tie-your-hands arbitration that is written into most of the consumer contracts we sign every day for credit cards, cell phones, etc.

So maybe it is time for Congress to get going and pass the Arbitration Fairness Act, which has apparently been languishing in the Senate since last December.

Why is it languishing? Because mandatory binding arbitration is big business for arbitration companies like the National Arbitration Forum and the American Arbitration Association, and for collection agencies like Wolpoff & Abramson, who bring tens of thousands of arbitrations each year.

Mandatory binding arbitration is not the cost-efficient arbitration that companies and consumers mutually agree on after a dispute arises. This elective arbitration is good, as long as everyone agrees to it.

But look for the National Arbitration Association and the American Arbitration Association to talk only about the positives of arbitration. Read carefully. Yes, many people support arbitration. It can be a very cost-effective alternative to the court system. But only when it is a real choice.

It can also be prohibitively expensive for the consumer. And it usually is where mandatory binding arbitration is forced on the consumer.

Mandatory binding arbitration is not a choice. It ties consumers’ hands in exactly those cases that may be better heard by a court, and subtracts many of the protections of the court system (like meaningful recourse if a defendant is never even served with a complaint). That, obviously, is why corporations love it.

Time to write your congressperson and urge them to put some fairness back into arbitration.

New Poll: Americans Say “No Thanks” To Binding Arbitration [Consumer Law & Policy Blog]

  • Thomas

    As a math and science and computer guy not a Legalese speaker I didn’t even know what a BMA clause was until I came here. People complain all the time when I use computer jargon to explain something yet feel ten pages of fine print written in psodo-Latin English legalese mumbo jumbo is appropriate for my employment contract I’m FORCED to sign in order to be employed get insurance credit card bank account etc.
    From now on I’m not even going to try to simplify my language for you non-technical legal types. If you can’t understand a simple Fourier transform or the simple mathematics of calculating tangent velocities of counter rotating objects I should be able to take you for all your worth right? Because I spent my time advancing the human condition as an engineer instead of being a legal parasite I’m a lower class member of society not deserving of the rights I unknowingly signed away. I mean thats the whole logic of most of the legal arguments I have heard. If your not a lawyer and don’t understand the language you shouldn’t participate in modern society by getting credit, cell phone, car, home etc.
    The BMA clause is an obvious attempt at circumventing the constitutional rights of individuals for personal gain. Any company that uses such a clause in a contract must be considered suspect if they have a BMA clause they must be worried about lawsuits right, they must be doing something Illegal if they have this clause written in to protect themselves against our system.

    Thanks for the warning, here’s one for you legal types, This country used to run on roads and laws, now it’s run on computers. Every day computer geeks like me get stronger and word smiths and smarmy lawyers get a little weaker. one day you will look back and wonder why your bank account is empty your credit rating is ruined your house and car are repossessed your medical records “forget” that you are allergic to X and you suddenly have a long criminal record and arrest warrants you were unaware of.
    Sorry you should have read through all that computer code on that program you ran on your PC before signing the EULA…………

    hmm… I think I’m going to start putting legal stuff in my computer code like “if this product is used in a law office 10% of all profits go to me” Better start learning C++ and JAVA if you expect to be a part of society, get a credit card, by a home etc…

    Turn about is not only fair play, it’s a lot of fun.

    By reading this sentence you agree to name all your children BILL GATES and send 50% of before tax income to….

  • http://caveatemptorblog.com/find-consumer-bankruptcy-attorney/ Sam Glover

    I’m sorry you have had such bad experiences with lawyers that you want to lump all lawyers into one category. In this case, it isn’t the lawyers who want mandatory binding arbitration, it is the executives who value the bottom line above all else.

    But yes, many lawyers use needlessly-complex language in contracts. Not all, though. Many, like me, believe that even the most important contracts can be simple and readable.