Congress Acts to End Forced Arbitration

Did you make a call on your cell phone today?  Or buy something using your credit card?  Most Americans engage in these activities every day without realizing that they could be giving up their legal rights – specifically, their right to hold the cell phone company or the bank accountable in court if they cheat customers or violate their privacy.  It may sound crazy, but when you bought that cell phone or opened that credit card, the corporation likely buried a forced arbitration clause in the fine print of the agreement.

With forced arbitration, corporations can kick Americans out of court and instead funnel them into a rigged forum decided by an arbitration company chosen by the very corporation that broke the law. These dangerous clauses are everywhere – from cell phone contracts and credit card agreements, to college enrollment documents and even nursing home admissions forms.

This widespread, abusive practice is used by corporations to ensure that Americans can never hold them accountable in court when they break laws designed to protect consumers, employees, and students, and it can only be stopped if Congress acts. 

Yesterday, U.S. Sen. Al Franken (D-Minn.) and U.S. Rep. Hank Johnson (D-Ga.) reintroduced the Arbitration Fairness Act of 2015 (AFA) [H.R. 2087], which would prohibit corporations from forcing people into arbitration and ensure that rights are not eliminated by the fine print. 

If enacted, the AFA would:  

  • Eliminate forced arbitration in employment, consumer, civil rights, and anti-trust cases; 
  • Ensure that the decision to arbitrate is truly voluntary; and
  • Restore fundamental rights created by state and federal laws that are currently at risk of being wiped out by forced arbitration.

Forced arbitration is especially ubiquitous among predatory, for-profit colleges. Notorious scam colleges like Corinthian and  Everest slipped these clauses in their enrollment forms, leaving cheated students drowning in student loan debt and unable to recover their losses in court.

On Tuesday, U.S. Sen. Dick Durbin (D-Ill.) and Rep. Maxine Waters (D-Cal.) introduced a bill to make sure other students aren’t denied this right.  The Court Legal Access & Student Support (CLASS) Act of 2015 will prohibit any school that receives student aid funding from the Department of Education from using forced arbitration against students.