Should The Law Ban Consumer Arbitration Agreements
- Posted on December 17, 2020
- in Uncategorized
- by admin
The arbitration agreement contained in many consumer contracts is generally a clause or provision of the contract that states that, by signing the contract, you agree to submit to arbitration in the event of a dispute. For it to be binding, both sides must agree on this point. If you sign the contract, you indicate that you accept the terms and accept them. If you sign a contract with a compromise clause, you cannot take legal action or participate in a group action. Subsequently, this year or early 2016, the GFPb intends to issue a formal notice on the proposed regime, by which the Agency will consult public notices for a given period of time.  As with the CFPB study, the CFPB`s draft proposal is strongly opposed: some opponents argue that any rule based on the framework of the proposal will result in additional class conflicts, worthless, which will increase the cost of resolving disputes and ultimately result in increased costs to consumers for financial products and services.  Some professional organizations believe that arbitration is “a very valuable forum for clients to resolve disputes” and that “the CFPB should focus on improving the arbitration system for financial services clients, rather than effectively promoting arbitration procedures in favour of lengthy and costly group actions, which often benefit only the complainants` lawyers and not consumers.”  The fight to maintain compulsory arbitration is therefore a bad policy that runs counter to the principles of the free market and has been whipped without the same control required for the new rules. It`s also one thing: bad for business. The proposed rule prohibits affected suppliers from “relying in one way or another on a pre-arbitration agreement” with respect to “any aspect of a class action relating to any of the financial services or products covered by the rule after the final rule comes into force.” The prohibition does not apply if the presiding court has decided that the case cannot be pursued as a class action and that the time to review the appeal has expired. In response, users are expected to complain. Even if individual victims have not decided to take legal action for the costs incurred, a lawyer could bring a class action to represent thousands of aggrieved consumers. However, customers had already accepted – largely unknowingly – a binding arbitration clause in the fine print of their card contracts.
Their right to sue individually or by class action was thus effectively approved. Under such a clause, individuals waive their seventh right to amend a civil proceeding by a jury in favour of a meeting with an arbitrator – someone chosen by the company involved – in order to play the role of judge and jury. If you want to learn more about the dangers of arbitration clauses and how they may affect you in more ways than one, you should read the three-part New York Times series or see this latest NPR piece on the possible loss of your constitutional rights. Once again, the numbers are clear: class actions bring in hundreds of millions of reliefs to consumers, while violators like Wells Fargo are forced to pay a big break. The right to sue is something that deserves to be defended. These are important policy issues and these are precisely the principles that are defended by free market advocates: freedom of choice, equal conditions of competition, the absence of a single regime. But mandatory conciliation goes against all these principles: it is a unique solution that reduces consumer freedom of choice and assumes that companies know better what is best for their customers than the customers themselves.