The FAIR Act would end corporations’ use of forced arbitration and give cheated consumers, workers, and small-business owners their day in court.
WASHINGTON – Yesterday, Congressman Hank Johnson (GA-04) and U.S. Senator Richard Blumenthal (D-CT) announced the reintroduction of the Forced Arbitration Injustice Repeal (FAIR) Act. The FAIR Act would restore the right of consumers, workers, and small businesses to access the courts to hold banks and other large corporations accountable when they violate the law.
“Corporations require people signing up for essential services like a telephone or bank account to sign away their rights to access the courts,” said Patrick Crotty, senior attorney at the National Consumer Law Center. “Businesses shouldn’t be allowed to use hidden terms in fine-print contracts to escape justice when they steal from you. I applaud Senator Blumenthal and Congressman Johnson for introducing the critically important FAIR Act.”
Forced arbitration blocks people’s Seventh Amendment right to be heard by a judge and jury in a public courtroom. Instead, cases are diverted to privately hired arbitrators whose businesses depend on keeping “repeat customers” happy. There is no right to appeal if the arbitrator ignores the law or overlooks the facts. Forced arbitration clauses also often prohibit individuals with similar claims from banding together in class or collective actions. Class actions let consumers and small-business owners band together when it is difficult or expensive to seek justice alone.
“With the federal government walking away from consumer protections, it is more important now than ever to restore our right to protect ourselves when companies violate the law,” said Lauren Saunders, associate director at the National Consumer Law Center.
These fine-print traps are ever present in the boilerplate terms and conditions for everything from bank accounts to cell phones, to peer-to-peer payment apps. They are even found in nursing home admission contracts.
Studies confirm that consumers are mostly unaware of arbitration clauses, do not understand their meaning and consequences, and are unable to meaningfully consent to the take-it-or-leave-it terms. Still, hundreds of millions of people are subject to forced arbitration clauses in everyday transactions.
Related Resources
- Press release: After Disney Wields its Terms of Use to Dismiss Customer’s Lawsuit, Groups Call on Congress to Pass FAIR Act, Sept. 15, 2024
- Press release: Study: 99% of Consumers Unaware they are Subject to Forced Arbitration, July 27, 2023
- New York Times “Arbitration Everywhere, Stacking the Deck of Justice” Oct. 31, 2015
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