For more than a decade, big business has waged a battle against consumers — access to the courts. When we buy cell phones, apply for credit cards, and purchase vehicles, most of us are signing away our rights to file a lawsuit and have our dispute decided by a jury of our peers. How? These contracts we’re signing contain arbitration clauses that require us to file claims in front of arbitrators (not judges and juries), often paid by the businesses we are complaining about. Arbitrators’ decisions are not public record, access to discovery is limited, and it’s virtually impossible to appeal. What’s more, arbitration clauses often contain class action bans, meaning that you can’t ever file a claim seeking to represent other consumers who were similarly damaged.
This week, we received some great news. After conducting a study on arbitration’s impact, the CFPB announced an initial proposal focused on prohibiting class action bans. Director Richard Cordray’s announcement can be read here:
Director Cordray’s remarks echo my own litigation experiences. I have unfortunately turned down numerous cases because of the expense, risk, and lack of transparency in arbitration.
We still have a long way to go to ensure access to justice and the courts. But this is an important step in the right direction.
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