The news has been full of “forced arbitration” stories lately. This is an issue with solidly mind-numbing potential, so that’s really saying something. What’s more, these stories almost all leave the reader condemning forced arbitration as anti-consumer or anti-employee or anti-patient or just anti-everyone. (Like Above the Law's Your Daily Reminder That Arbitration Provisions Are Ridiculous.)
Here’s Roger Ailes trying to force Gretchen Carlson’s sexual harassment lawsuit into private, secret “forced arbitration,” sparking outrage. There’s Airbnb trying to knock out the housing discrimination lawsuit against it by forcing the victims into arbitration. You can find one of these clauses buried in your Pokémon Go Terms of Service provision. Here’s a federal judge rejecting Uber’s attempt to force a surge-pricing anti-trust claim into arbitration.
Even if customers or employees are aware of these clauses – and almost no one is – there’s virtually nothing an individual can do to strike them. It’s really up to our public officials to enact new laws or regulations prohibiting this practice industry-wide. Indeed, one agency – the Consumer Financial Protection Bureau (CFPB) – is not just talking about the problems caused by forced arbitration and class action waivers. It’s doing something about it.
The CFPB has proposed a rule to limit use of forced arbitration clauses in financial services contracts. The rule would prevent “class action waivers,” thus allowing cheated consumers to band together and jointly sue banks and lenders that are engaged in illegal conduct.
We’re letting you know about this today because this will be our last PopTort for the summer. Sad! That gives you three full weeks to get your comments in. (I’ll be asking for a full report after Labor Day so don’t forget.)
And have a wonderful rest of summer!