Consumer advocate: Did you sign away your right to a trial by a jury?
The right to a trial by a jury of our peers is a keystone of the American legal system — a tenet so essential and important that the Founding Fathers saw the need to cite it in the Declaration of Independence and in three separate places in the Bill of Rights.
It was, quite obviously, a big deal to them. And it still is today.
But nearly every day, we sign away that right — often unknowingly and to our detriment. So what is it that makes us willingly surrender that basic legal right?
Convenience paying for our morning cup of coffee.
A new credit card or checking account.
The latest cell phone.
Borrowing money.
A job.
And much more.
Heck, for a while in Texas, you could even give up that precious freedom by simply walking through the door of a popular burger chain.
So what's going on?
The common thread is something called a mandatory arbitration agreement, a legal lock tucked deep in the fine print of many consumer contracts that most of us never bother to read.
And, in the opinion of consumer advocates, the agreements are ticking time-bombs that can come back to bite you in the ... well, you know where.
What is mandatory arbitration?
When you sign a deal for a new phone or a payday loan, for instance, you are often waiving your right to take a beef to court and instead agree to have any conflict resolved by an arbitrator — often one selected by the company.
In a report to Congress in March, the federal Consumer Finance Protection Bureau explained: "The advantages and disadvantages of pre-dispute arbitration provisions in connection with consumer financial products or services — whether to consumers or to companies — are fiercely contested. Consumer advocates generally see pre-dispute arbitration as unfairly restricting consumer rights and remedies. Industry representatives, by contrast, generally argue that pre-dispute arbitration represents a better, more cost-effective means of resolving disputes that serves consumers well."
Ultimately, the clauses are aimed at heading off class-action lawsuits where a large number of customers have small claims, ranging from a few hundred to a few thousand dollars, which would be cost prohibitive to pursue individually. But when combined in a class-action lawsuit, those claims can be brought in court and result in big hits to a company's bottom line. That's something businesses obviously don't want.
"These clauses are written by corporations," said David Seligman, an attorney with the National Consumer Law Center, "to set up a secret and lawless process that prevents consumers from holding corporations accountable for unlawful conduct."
He said said forced arbitration costs Americans hundreds of millions of dollar every year.
What can you do?
That's a mixed bag.
"You either sign up for a credit card or you don't," Seligman explained. "You either take out a car loan or you don't."
Vess Miller, an attorney with the Indianapolis law firm Cohen & Malad, has seen the consequences of mandatory arbitration clauses hurt Hoosier consumers.
"We have had people call us with complaints about banks, credit card companies, telephone providers, and other consumer businesses," he said. "We have had to turn them away because of arbitration clauses in their contracts. The clauses literally close off access to court for people who have claims that might otherwise get brought and that might otherwise result in deterring a business from a bad practice."
But, Miller said, that doesn't mean consumers have to just sit back and accept the status quo.
He said some contracts allow you to opt-out of mandatory arbitration, but such options often come with strict timelines and require some added work — including reading a contract before you sign on the dotted line.
Advocate for change
Beyond that, consumer advocates recommend reaching out to the federal Consumer Finance Protection Bureau, signing online petitions from consumer groups fighting forced arbitration, and writing or calling your congressman and senators.
"In general, for consumers, there is very little they can do aside from advocating for change," Seligman said. "The key thing is bringing it out into the spotlight and telling lawmakers this is a real concern."
Harry T. Widmann, former national president of American Board of Trial Advocates, also recommends sharing your concerns with the corporations.
"The most important thing to do is for consumers to band together," he said, "to put the pressure on these corporate interests to back away from these forced arbitration provisions."
Call the Star consumer advocate Tim Evans at (317) 444-6204. Follow him on Twitter: @starwatchtim.
Here are some more tips for dealing with mandatory arbitration clauses common in a wife variety of consumer contracts:
•Try to do business with institutions that don't use arbitration clauses (though this can be difficult for some industries where the clauses are pervasive).
•If there is an option to opt out of an arbitration clause, exercise that option (and be aware, you usually need to do so in a short window of time after the consumer transaction)
•If you have a claim that is for a significant amount of money ($15,000 or more), you may be able to get a lawyer to help with the arbitration
•If the claim is low value, see if a lawyer can find a way to invalidate the arbitration clause and bring a class action
•If there's no way around the arbitration clause and it's a low dollar claim, you will have to evaluate whether it is going to be worth the time and potential expense to try to do an arbitration yourself
•You can report the business to the Attorney General, Federal Trade Commission, or other regulator (though government resources are scarce, so often complaints go unaddressed)
Several consumer groups have online petitions urging federal lawmakers and agencies to repeal mandatory arbitration: