On walkabout in life and technology

Forced Arbitration and the Right to Sue

One of the things that is bothering me these days is the number of vendors changing their contracts unilaterally to require us to use their own arbitration and giving up our right to sue. You can ‘opt out’ of this change, where ‘opt out’ means they will immediately terminate service. The mobile carriers in the USA have had these for a while, as have the credit card companies and many employers. Paypal is implementing it now.

Now, I have no interest in suing any of these companies. I have no reason to (yet) and cannot afford it anyway even if I did as they have practically unlimited legal budgets. But why must we give up our legal rights to keep using their services?

It turns out that this practice is not only common and legal, it’s encouraged by the courts as well. Have a read of Stephanie Mencimer’s article Have You Signed Away Your Right to Sue?:

Since then, judges have used the Supreme Court ruling to legitimize and further expand the use of mandatory arbitration, even though, as Justice Hugo Black once observed, arbitrators can be "wholly unqualified" to oversee complicated cases. Indeed, private arbitrators aren't required to follow the law or established precedent, or even issue written decisions. Many have legal backgrounds, but there is no standard dictating that they be lawyers or credentialed in any way—yet their decisions can't be appealed.

So the situation is that you have unqualified arbitrators paid by the companies that are forcing you into arbitration in the first place who get to decide disputes against the selfsame company! And their decisions are legal, binding and cannot be fought. Who the heck would agree to that?

One could argue that you have a choice to not sign the agreement that forces arbitration. Bullshit! The argument assumes that there is an alternative service that you can get without the forced arbitration clause. Try and find a mobile carrier that does not force arbitration. If you want or need a mobile phone in the USA, you have to give up your right to sue. Credit card? Same. Job? If there is a union anywhere near the industry, same.

Since companies with forced arbitration clauses know that they will “win” any and all disputes cheaply, what forces them to keep their promises? They are free to lie about services offered, and if you, the consumer, feels ripped off, tough. They don’t need to compete because their competition does the same. They don’t need to innovate or update or upgrade, they can get away with usurious prices and awful service with no consequences. And when the government does attempt to step in, they have all this money to spend on “friendly” politicians.

This is yet another step in the great American process of taking away the rights granted to individuals. This is no longer a place where the rule of law applies, it’s a place where the rule of power and money applies.

I’ve had this note on the boil for a while since I tried to ‘opt out’ of illegal credit card fees last year and they gave me two choices: accept the fees or lose all credit cards with the bank. Recently, PayPal changed its terms and conditions to force arbitration, and after seeing the many PayPal horror stories, well, I do not want to be yet another victim of theirs. Fortunately, there are other payment services. Unfortunately, no other credit card providers or mobile phone services.

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