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Arbitration

The Fairness of Options. “Seems to me that if arbitration is indeed fair to everyone, it shouldn't have to be crammed down consumers' throats. Arbitration should be offered as a cost-effective and relatively speedy alternative to litigation. But it should be just one option available, just as filing a lawsuit should be an option.” 
Excerpted from: Column - Sue the company? Most contracts force consumers to forfeit that right, David Lazarus, Los Angeles Times, 5-3-09


Singing a different tune: The Hypocrisy Boogie.  "Corporate executives routinely sing the praises of arbitration clauses…that typically bars a consumer from going to court in the event of a dispute."

"Now three law professors suggest that companies are far less likely to use arbitration clauses in contracts with each other than they are in contracts with consumers."

"The findings by Professor Eisenberg, whose co-authors on the most recent study were Geoffrey P. Miller of New York University School of Law and Emily Sherwin of Cornell Law School, might prove provocative. Their study, which was described in an article this summer in the University of Michigan Journal of Law Reform…"

"They found that companies included mandatory arbitration clauses in 75 percent of consumer agreements but in just 24 percent of contracts over all."

"Companies say that arbitration is "a fair and cost-saving process," [Eisenberg] continued. "If they believe that is true across the board, why don’t they insist on it when they contract with each other?"  
Excerpted from: Companies Unlikely to Use Arbitration With Each Other, By JONATHAN D. GLATER,  NYT, 10-6-08


Arbiters for Justice or Debt Collectors? "What if a judge solicited cases from big corporations by offering them a business-friendly venue... teaming up with the corporations' outside lawyers? …the same corporations [who] helped pay the judge's salary?"
 
"Yet that's essentially how one of the country's largest private arbitration firms operates. …Often without knowing it, individuals agree in the fine print of their credit-card applications to arbitrate any disputes... NAF, which dominates credit-card arbitration, operates a system in which it is exceedingly difficult for individuals to prevail."
 
"…behind closed doors…NAF sells itself to lenders as an effective tool for collecting debts. As of September, 2007, a NAF PowerPoint presentation aimed at creditors [potential clients] and labeled "confidential" promises "marked increase in recovery rates over existing collection methods."

 "At times, NAF does this kind of marketing with the aid of law firms representing the very creditors it's trying to sign up as clients [The] marketing presentation, boasts that creditors may request procedural maneuvers that can tilt arbitration in their favor. "Stays and dismissals of action requests available without fee when requested by Claimant—allows Claimant to control process and timeline," the talking points state." 
Excerpted from: Banks vs. Consumers (Guess Who Wins), Business Week, 6-5-08


Fine Print? Hardly. Mandatory Arbitration Clause.  "In its early incarnation, arbitration was designed as a way of resolving disputes outside of the courts, and it's often still used that way when both parties agree to it. But the mandatory arbitration provisions in consumer contracts are very different animals… These sorts of provisions, buried in the fine print of consumer contracts, have become de rigueur in everything from employment contracts to cell phone agreements...Most people don't even realize they've signed one".

"Arbitration seriously tilts the playing field in favor of businesses. Consumers have to pay the arbitrators just to hear their claims, unlike the public courts, where the taxpayers pay the judges. Arbitrators often charge hundreds of dollars an hour for their services".

"All of this is especially nefarious given that the vast majority of consumers who attempt to seek justice in mandatory arbitration lose…Public Citizen recently analyzed data the NAF provided to the state of California…Public Citizen found that in 94 percent of 19,000 cases, NAF ruled in favor of the businesses that hired them".
 
"One arbitrator handled 68 cases in a single day, awarding every penny that the big companies were seeking. In one case…the NAF also charged $1500 for a three-page document explaining the arbitrator's decision…".
Excerpted from: Suckers Wanted: How Car Dealers and Other Businesses are Taking Away Your Right to Sue, Mother Jones, Nov 26, 2007