Pitfalls of the Consumer Arbitration Clause

By Rheingold Giuffra Ruffo & Plotkin LLP

If you are a consumer (and who isn’t) you owe it to yourself to read the series of articles that the New York Times ran this week concerning an alarming trend in the business community: the growing practice of corporations inserting mandatory arbitration clauses into sales agreements. These clauses are buried deep within multi-page user agreements so that consumers rarely know about them, despite the fact that by entering into these agreements businesses are forcing consumers to waive their constitutional right to a jury trial should they be the victim of any wrongdoing by these corporations. Many of these clauses also force consumers to waive their right to join a class action against that corporation.

The end result is that in many instances, consumers are left with little recourse should they be a victim of corporate wrongdoing. The right to start a lawsuit and the right to a jury trial are waived. Your case will be decided by a corporate arbitrator, with no right to appeal. Not surprisingly, most victims lose under this process or are never able to bring their claim in the first place.

And lest you think that this only affects disputes over a few dollars, think again. These mandatory arbitration clauses are now spreading to areas one would never have expected. Recently, a victim of nursing home abuse had her lawsuit dismissed because the nursing home admission papers that her family signed contained a mandatory arbitration clause buried deep within the many pages of forms they were presented with when she entered the facility.

The lesson here: read everything before you sign, and call your congressman to let him know that this outrageous practice needs to stop.

You can find the full New York Times articles here:

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