Kia Franklin

Am I Dreaming? SF sues NAF on behalf of consumers

Pinch me. San Francisco just filed suit against the National Arbitration Forum, what many say is the most unfair arbitration company out there, for what appears from a groundbreaking Public Citizen report to be an extreme and blatant bias against consumers in disputes against corporations.

Tort Deform bloggers have written about this before. (Here's a good read for those unfamiliar with this issue, or visit our archive). Civil justice and public interest organizations have come out of the woodwork to stand up against binding mandatory arbitration. The list of bma opponents goes on and on. Yet despite all the whoops and hollers, it seems that many people are either a) unaware that binding mandatory arbitration agreements exist, and to such a pervasive extent, or b) unconvinced that binding mandatory arbitration poses fairness problems for the individuals who find themselves in a dispute and restricted to this forum for resolution of the dispute.

This lawsuit should spread awareness about this important issue, which affects each and every one of us. Now, whether this dream will come true via a consumer victory is yet to be seen.

Kia Franklin: Author Bio | Other Posts
Posted at 12:14 PM, Apr 07, 2008 in Arbitration | Mandatory Arbitration
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It was only a matter of time before something like this happened but I have to say it happened sooner than I thought it would. IMO private, industry-run arbitration has evolved into a total sham. The parties are not on a level playing field, in large part because of repeat business between arbitrators and businesses. Everyone who tells our consumer org a tale of arbitration woe says it cost a lot more than they were told it would. One homeowner has already spent $25,000 and is being asked to spend that much again. That easily amounts to what she'd have spent to litigate, probably more, since most lawsuits settle and never go as far as an expensive trial. Another big problem with arbitration is that it hides so many complaints in private records. Consumers are always told, "Do your homework," but increasingly, complaints are not public record in part due to arbitration secrecy. Only Calif. has public arbitration decisions and that is where it was discovered the corporations won 95% of the time in credit card disputes. If a consumer "wins" in arbitration they often get a fraction of their damages, too.

Corporations love arbitration because it hides complaints, gives them a huge advantage, and may cost the corporation less compared to having to be accountable for terrible products or services. The fact corporations mandate the use of binding arbitration clauses in order to do business with them indicates they know ahead of time it stacks the deck against consumers. If arbitration were truly neutral I don't think corporations would care that much one way or the other.

This "poll" by the Chamber of commerce that supposedly proved people prefer arbitration was a joke, IMO. If you ask people about something they don't know about and steer them to the desired answer, of course you will get the desired result. They should've asked the consumers who've been through it and got ripped off what they thought of it.

Posted by: Cindy S | April 7, 2008 4:01 PM