TAMPA, Fla. (WFLA) – What would you do if your bank mishandles your money and charges you? Or if your photos were taken without permission and used in a company’s ad?
If you have a problem with how companies do business, you typically can’t take your case to federal court. 8 On Your Side is explaining how forced arbitration clauses can limit your options.
In 2015, Volkswagen publicly admitted to secretly programming some of its diesel engines to cheat emissions tests. Hundreds of thousands of owners banded together in a group lawsuit. But some consumer advocacy groups believe this type of accountability may happen less often because more companies are adding a forced arbitration clause in sales agreements.
“Basically it means you’re giving up your right to take a dispute to court. This is a constitutional right you have and you’re giving it up even before you know that there’s a dispute,” says Scott Medintz with Consumer Reports.
Arbitration clauses are typically buried in the fine print of product manuals and websites. Most people don’t even realize they are agreeing to them.
“The implications for consumers are huge. Many of the rules that are in place to ensure fairness in the court system are missing from arbitration. So, for example, the arbitrators don’t technically have to follow the letter of the law – and if you’re not happy with the result, you generally don’t have a right to appeal,” says Medintz.
Arbitration is private, with no public record. Plus, unlike a court of law, arbitration does not allow people to join together to fight back, as happened in the Volkswagen class-action suit.
“The concern is that companies are using arbitration to pre-emptively crush consumer objections to their practices, whether those practices are unsafe or predatory or even illegal,” says Medintz.
It’s just another reminder to read the fine print ahead of time and consider going with another company if you notice a forced arbitration clause. The US Senate is considering a measure passed in the House that would ban forced arbitration.
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