Arbitration and the FAIR Act (H.R. 1423 – 116; S. 610)
The FAIR Act was introduced in the House by Representative Henry “Hank” Johnson Jr. (D-GA4) and in the Senate by Senator Richard Blumenthal (D – CT) on February 28, 2019. The FAIR Act (Forced Arbitration Injustice Repeal Act) seeks to restore consumer and worker access to justice and end forced arbitration.
Arbitration is this legal concept we hear about in passing but few understand what it really is, but most of us are bound to it in many ways through the apps we download, to employment contracts to the purchase of consumer goods.
It’s important to know about and understand arbitration because most of us don’t read the fine print on agreements we sign, electronically or manually. Arbitration robs you of your right as an individual consumer and employee to hold a company accountable for illegal or unethical conduct that harms you leaving you without the ability to seek full accountability from the company.
What is arbitration? In legal terms, it's the submission of a dispute to an unbiased third person designated by the parties to the controversy, who agree in advance to comply with the award—a decision to be issued after a hearing at which both parties have an opportunity to be heard. In layman's terms, it's when you have a dispute, primarily with a corporate entity, and instead of suing the company, you and the company meet with a paid professional to hear each side of the situation and the paid professional determines who's right or who's at fault. The paid professional is likely not a lawyer or anyone with knowledge of the law, it's generally, someone paid by the company to give their opinion, regardless of the law.
A couple of scenarios to think about and ask yourself if you would prefer to settle each issue in arbitration or have the ability to sue.
Scenario 1: You notice on your monthly cell phone bill, the cellular carrier has been charging you $5.25 a month for an unknown fee. That adds up to $63.00 per year, which may not seem like a lot of money, and you can overlook it. Imagine the cellular carrier charges the same fee to1.2 million customers and makes $47.63 million dollars, you might feel that the company has taken advantage of their customers and operated in an unethical way, right? According to your signed agreement with the company, no one can sue because everyone agreed to settle all disputes through arbitration, individually. There is no possibility of a forming class action lawsuit with all customers collectively pursuing action against the company because arbitration means each customer has to handle their own dispute individually, with no knowledge of other customers.
Scenario 2: You're an employee at a company, and your supervisor has harassed you sexually and makes the workplace a hostile environment and then fires you when you complain to Human Resources. When you accepted the job and signed your employment agreement, there was an arbitration clause. You are not able to sue if you want to hold your boss and the company accountable for illegal activity. Your only option is arbitration. This means you also aren't going to know that the company previously paid 12 settlements to employees who also filed complaints about the same supervisor for the same illegal behavior.
Scenario 3: You download an app, that requires you to submit personal identifiable information (PII) such as your full name, date of birth and social security number to use. When you click on the submit button when you download the app, you also agree to arbitration. The app is then hacked and your information gets shared to the dark web and your PII is up for bid to the highest buyer. The hack exposes the information of millions of other users too. No one can sue and collectively you can't file a class action lawsuit either.
One piece of information not known to most people is that in arbitration the arbitrator (the paid professional) statistically sides with the company more than 90% of the time. Arbitrators rely on business from companies to generate their income.
The reason we at The One Less Foundation, take a position on arbitration and support the FAIR Act is that millions of Americans cannot afford to hire an attorney and they are often the most financially vulnerable. In situations where hourly employees and financially fragile consumers are harmed by corporations, they have little to no recourse of action, made worse by arbitration. Wealthier employees and consumers have the ability to hire an attorney and try to get arbitration thrown out and gain the ability to sue.
We hope that you will call your House Representative and Senators and ask them to support the FAIR Act. As of today (June 1, 2019) there are 211 Representatives signed on to support the FAIR Act (H.R. 1423-611), all of them Democrats, and 35 Senators signed on to the Senate version of the FAIR Act (S. 610), all of them Democrats.
Some key points to remember about arbitration and why you should support the FAIR Act.
Forced Arbitration clauses prevent:
1. access to justice, by denying consumers and workers from banning together to take group action for systemic or widespread illegal or unethical behavior.
2. consumers or employees from learning about previous settlements of the company
3. the public from opting-in to an arbitration agreement and instead make it the responsibility of the public to know how to opt-out, which isn't usually clearly stated.
4. consumers and workers from receiving due process, or being heard by a judge and jury
Forced Arbitration clauses lack transparency:
1. most arbitrators are hired by the company and their income is dependent on repeat business from corporations
2. arbitrators rule in favor of the corporation 90% of the time
3. private arbitrators do not have to follow the law or facts when deciding a case or explaining their decisions
Contact your House Representative and Senators, tell them you support the FAIR Act and they should too. Let's get the FAIR Act passed.
Don’t forget to sign up for our Advocacy Newsletter so you can always stay informed.