Buried in the fine print of a billing insert, employee handbook or health insurance plan, one always finds a long, muddled statement compiled in legalese, which unfairly tips the scales of justice – to the tune of a powerful thud. Called mandatory binding arbitration clauses, they waive consumers’ civil justice rights, instead funneling claims into a costly private legal system that favors corporate defendants. 

Mandatory arbitration clauses are undermining consumer protection, civil rights and other laws that level the playing field between big businesses and individuals. The individual is left with no choice but to waive these rights, because arbitration clauses are presented on a take-it-or-leave-it basis – often without a consumer’s knowledge.

The Federal Arbitration Act (FAA) was enacted in 1925 as an alternative forum to resolve disputes “between businessmen.” The FAA’s history clearly demonstrates Congress’ narrow intent, yet in the modern era the Supreme Court has glossed over this history, instead asserting that the purpose of the FAA was to overcome judicial hesitation “to enforce agreements to arbitrate.” The result has been an overwhelming expansion of the scope of binding arbitration well beyond what Congress ever intended. 

Arbitration can be a valid and effective method of dispute resolution when agreed to voluntarily through negotiation by two parties of similar power, but when used by a dominant party to limit the legal recourse of a weaker party in a non-negotiable contract, it becomes an abusive weapon. And corporate wrongdoers caught red-handed are not shy to exercise this power in pummeling the disadvantaged consumer at the arbitration table – a table usually dominated by corporate defense attorneys and an arbitrator whose career relies on repeat business from the very corporate referrals over which he/she is arbitrating.  Clearly, the motive for fairness is being undermined at the very least.   

We must enable consumers to hold corporations accountable when they endanger the public with deadly drugs or food, when they collude to artificially inflate prices, or when they swindle shareholders and employees. In light of so many recent corporate scandals, it is time for Congress to look at amending the FAA to serve consumers, not corporate wrongdoers.