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Mandatory arbitration: Consumer beware!

Do you have the right to sue your bank for cheating you on your mortgage? What about the amusement park where you were injured on a defective ride? Can you sue the nursing home you put your mother in if they neglect or abuse her?

Maybe not. You’d better check your contract or the fine print on your tickets. More and more companies are quietly inserting mandatory arbitration clauses into their consumer contracts—and “mandatory” is just a nice way of saying “forced.”

A mandatory arbitration clause forces you to try arbitration before you file a lawsuit—if it allows you to file a lawsuit at all. In many cases, it also requires you to accept the ruling of the arbitrator, no matter how grossly unfair the ruling seems. Worse yet, the clauses often give the company, not the consumer, total control over who gets chosen as an arbitrator and where, so the company naturally chooses arbitrators that have a history of ruling in their favor.

Why aren’t more people speaking out about the injustice of these kinds of clauses? Because the clauses also often include language that obligates you to keep the arbitration action and decision to yourself.

Most of the time these arbitration clauses are found tucked in the small print of an application or other paperwork, sometimes several pages deep. The company may make no particular pains to show it to you or to explain, in plain language, what it means for your rights.

However, not all courts are willing to honor arbitration clauses that are clearly biased and slanted against the consumer, especially when the clause seems clearly designed to deprive the consumer of any other option and is hidden in the paperwork where it is difficult to find without a working knowledge of contract law.

For that reason, it’s important to never assume that the arbitration clause you were tricked into signing will absolutely control what happens. There are many attorneys who are willing to try to demonstrate to a judge that a sweeping arbitration clause was forced onto the consumer and isn’t in the public’s best interest to uphold.

Each case is unique and if you or a relative has been injured due to someone’s negligence, don’t assume that a mandatory arbitration clause will automatically deprive you of your rights without speaking to an attorney first.

Source: National Association of Consumer Advocates, “Arbitration,” accessed Feb. 17, 2017



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