
U.S. Regulator Wants to End Mandatory Arbitration for Consumers - ourmandave
http://fortune.com/2016/05/05/consumers-mandatory-arbitration/
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trimtab
An area that Mandatory Binding Arbitration must be eliminated is elder care.
It recently took our family a considerable amount of effort to find a good
care either in home or a facility that did not REQUIRE binding arbitration
clause plus an NDA for family member who now needs 7/24 care.

This industry hires inexpensive and untrained labor that regularly makes
mistakes that injure customers.

The "customers" in many cases have dementia or cognition issues.

Mandatory Binding Arbitration is almost always bad for customers. The game
board is tilted against them. Arbitrators must be agreed to by both parties,
but companies are the primary repeat customers of arbitrators and will NOT
select arbitrators that don't usually and regularly find for them.

Binding Arbitration as currently used should be eliminated as an option in all
contracts. It should always exist as an option of the parties, but not be
binding at the initiation of any service.

Binding Arbitration is a tool of companies to allow them to NOT be accountable
to their customers AND prevent that lack of accountability to made public.

A mandatory binding arbitration clause in any contract presented to you should
always be a warning flag that the other side does not intend to be
accountable.

Never enter into such contracts if you can avoid them.

~~~
rhino369
>Arbitrators must be agreed to by both parties, but companies are the primary
repeat customers of arbitrators and will NOT select arbitrators that don't
usually and regularly find for them.

Is there any empirical evidence of this? I've done arbitration twice and the
arbitrators seemed pretty impartial.

Most people just go with AAA arbitrators, which are well respected.

I've seen my colleges ask for information about potential arbitrators (I'm an
lawyer but I don't specialize in arbitration), and never has anyone even
suggested that an arbitrator was a company man or anything like that.

We need a low cost alternative to court. Courts apply strict procedural and
eventuality rules and engage in broad discovery that really increases the cost
of a case. A case costs tens of thousands of dollars in legal fees.

My biggest problem is that arbitration isn't really all that much cheaper than
court in many cases now.

I think it would be interesting to have an online arbitration process for
disputes under 10 thousand dollars. Both sides upload a memo arguing their
side and attach accompanying documentation and evidence including sworn
statements by witnesses. The arbitrator decides if a hearing is needed and if
it is they do a video chat hearing.

~~~
trhway
>I've done arbitration twice and the arbitrators seemed pretty impartial.

...

>I'm an lawyer

well, professionals typically treat each other much better. Another example
would be imagine a doctor treating another doctor :)

>I think it would be interesting to have an online arbitration process for
disputes under 10 thousand dollars.

well, Small Claims, while not online, is a pretty convenient and fast venue
for such scale.

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Overtonwindow
Mandatory arbitration by design is intended to give companies an advantage
because it also takes away the consumers right to sue. The arbitration firms
are unfairly biased in favor of the companies because if they rule against
them then the companies will simply stop using them. Anyone who pushes you
into agreeing to mandatory arbitration should be viewed with great suspicion.

~~~
Shivetya
then the solution is to have government, public, and industry, appointed
boards paid for by fees on the companies who want to use mandatory arbitration

~~~
Retric
_and industry_

No, if the court system is broken then fix the court system. Class action is
not to give the public relief it's to keep companies from taking 1$ from 10
million people when none of them would benefit from dealing with it. For
slightly larger issues we already have small clams court which works for mid
sized issues. And larger cases can go though the full court system.

To be clear, class action cases hurt firms far more than they help people, but
that's their job. If we want to replace them then the government needs to step
up and prosecute company's for this stuff.

------
rayiner
> “In the 50 years since the advent of modern day class action lawsuits,
> plaintiffs’ lawyers have made millions of dollars in fees from these suits
> while consumers often receive little benefit,” the [U.S. Chamber of
> Commerce] said in a statement.

Cynically, at least part of that is due to all the hurdles and barriers to
class action lawsuits that organizations like the Chamber of Commerce have
helped erect over the years. There are so many ancillary landmines unrelated
to the merits, such as those relating to class certification, that it's often
a choice between settling and recovering something, or going forward and
getting nothing.

On the flip side of it, there are a lot of really stupid class action
lawsuits. What we lack in the U.S. is a good way to really hold companies
accountable for small to moderate-size injuries to large groups of people. If
someone defrauds a bank for $100 million, the bank can sue and get a recovery.
But when a bank defrauds $10 from each of 10 million people, there is often no
recourse for those people.

~~~
gozur88
In those $10 from ten million people suits the defrauded people get nothing or
a close facsimile thereof, so it's not like class action suits give them
"recourse".

This kind of stuff is better handled administratively by federal bureaucrats,
of which we have plenty. Torts aren't really adding anything.

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ilikepi
Yes, please.

I've noticed two companies recently going beyond the typical binding
arbitration clause by laying out a less formal "pre-arbitration" step in their
dispute resolution process. One of them includes this gem, which to me reads
rather customer-hostile:

    
    
        You and [Us] wish to promptly and fully resolve any
        dispute arising in connection with these Terms of
        Service in good faith, confidentially, and
        informally with minimal transaction costs. Neither
        You nor [Us] may make any public statement regarding
        any such dispute and/or the existence of any such
        dispute except as otherwise expressly provided in
        this Section 11.
    

So if I complain about the service on Twitter due to some problem I'm having,
and then I attempt to start resolving the dispute, am I penalized because I
made public statements?

Hulu also[1] lays out a pre-arbitration process, but it seems less
confrontational.

[1]:
[http://www.hulu.com/terms#section13](http://www.hulu.com/terms#section13)

------
joshuaheard
It is a good idea to enable class action lawsuits against large entities. This
court ruling the rule is trying to fix is a loophole that should be closed.

However, what troubles me is that a sweeping policy change such as this, going
against a Supreme Court precedent, should passed as a law by elected
lawmakers, not a rule dictated by unelected bureaucrats. Even worse, this so-
called "Consumer Financial Protection Bureau" is an independent agency of
government with no effective oversight or subject to the usual checks and
balances of a government agency. This Bureau has already been sued for abusive
practices.

------
aasarava
I have yet to come across a healthcare provider -- physician, dentist,
optemetrist -- who does NOT have a binding arbitration clause in their
agreement. How do you avoid signing one when it has become the de facto
standard?

~~~
rhino369
Hypothetically you could cross out the arbitration clause and say you don't
want it. That often works for landlords and the crazy provisions they put in
their leases. But doctors tend to be more sensitive to fear of litigation
since they are often targets, so they might tell you to screw off.

What are you worried about though? Malpractice claims aren't forced into
arbitration. The clause in healthcare is really just going to cause disputes
about billing to go into arbitration.

~~~
cge
I actually did ask about this at one doctor's office, and they let me know I
was welcome to decline the arbitration clause (the document even noted that
option), but that the doctor would refuse to see me. This has appeared to be
the case with every doctor I have found over the last few years.

~~~
trimtab
This is common. With Elder Care, if you did not agree to a Binding Arbitration
agreement that usually also included a non-disclosure agreement that you would
never disclose why you were seeking restitution via the only vehicle you
contractually agreed too... arbitration you would not be accepted for any care
options.

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vanattab
While they are at it they should also require companies that pop up new terms
of service to show side by side the old and new terms with any changes
highlighted.

~~~
MichaelBurge
If the government got into the habit of regulating conveniences back in the
1970s, we'd have ("Contracts must be typed with this type of ink, and signed
with this type of ink so that it scans well", "Contracts must use this size
paper to be easily scannable") and the entire business of e-signing documents
would've never happened because there'd be so many legacy usability
requirements.

You'd be faxing forms to hip new startups to agree to their terms, signing
your name next to every major paragraph, until somebody successfully pushes a
new form of contract signing through the government.

~~~
mikeash
Are you saying that the whole mess of EULAs and click-through agreements and
obscure web site TOSs and the rest could have been avoided? What a missed
opportunity!

------
vinhboy
I remember reading something about this on NYTimes before. Didn't realize it
was so long ago:
[https://news.ycombinator.com/item?id=10483024](https://news.ycombinator.com/item?id=10483024)

------
jeffdavis
Private arbitration serves two related purposes (as far as I can tell):

1\. Cheaper court costs overall

2\. Less ability for one party to impose huge costs on the other at little
cost to themselves (any time such an imbalance exists, it can be used like
extortion to force a favorable settlement).

If we solve those problems with public courts, I don't see any need for
mandatory arbitration.

~~~
trimtab
Fix the courts. Arbitration is not a a fair fix. At least if a case has merit
and the aggrieved can find an attorney who will take the case on contingency.
Attorneys don't take contingency cases that they don't think they can win.
That is the best check against frivolous cases.

------
jalami
I would love for this to be an issue consumers could spearhead, but most
consumers only care about things like this once they get into legal trouble.
It's the same issue with prisoner's and privacy rights. I try to avoid
mandatory arbitration whenever possible, but there simply isn't enough
consumer advocacy around it. I'm convinced companies like FB could add
whatever they want to their TOS and most fb'ers wouldn't blink. Writing to the
companies about issues you see in their TOS or Privacy Policy probably does
more than simply avoiding them or writing your representative.

This has saturated all markets to the extent that you can't simply choose a
company that doesn't require private arbitration. If you want to even play
Minecraft, you have to agree to Microsoft's binding arbitration first. At
least there's always Minetest I guess.

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mc32
While putting limits to this practice is good for the consumer, I think they
should also have a threshold to bring on frivolous lawsuits against these
companies. Death by a million microcuts.

~~~
zyxley
Do keep in mind that large companies have a very strong incentive to push
stories of entirely legitimate lawsuits as 'frivolous'. The McDonalds coffee
case is a classic example.

~~~
esilverberg2
For background on that case:
[http://www.theatlantic.com/entertainment/archive/2011/07/hot...](http://www.theatlantic.com/entertainment/archive/2011/07/hot-
coffee-and-the-scalding-of-the-american-jury/241787/)

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disposition2
The official press release from teh CFPB
([http://www.consumerfinance.gov/about-us/newsroom/consumer-
fi...](http://www.consumerfinance.gov/about-us/newsroom/consumer-financial-
protection-bureau-proposes-prohibiting-mandatory-arbitration-clauses-deny-
groups-consumers-their-day-court/)). It looks like they are accepting public
comments once this is 'official' in the register.

------
ck2
Was that the group Warren was supposed to head but Republicans made sure she
could not?

Good to see the are coming up with stuff like this - do they have the
authority to make it happen or do they need congress?

Because if they need congress, never going to happen.

