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Consumer Reports applauds House for approving FAIR Act to end forced arbitration, calls on Senate to act

Bill prohibits corporations from forcing consumers, workers, and small businesses to use arbitration to settle legal claims 

WASHINGTON, D.C. – Consumer Reports praised lawmakers in the U.S. House of Representatives today for approving H.R. 1423, the Forced Arbitration Injustice Repeal (FAIR) Act.  CR had urged lawmakers to support the bill, which would prohibit corporations from forcing consumers, workers, and small businesses into mandatory arbitration to settle legal disputes, and cutting off their ability to go to court.

“Forced arbitration tilts the deck against consumers and undermines the rule of law,” said George Slover, senior policy counsel for Consumer Reports.  “Today’s vote in the House moves us a major step closer to ending this injustice.  The FAIR Act will help restore the rights of consumers to hold corporations accountable when they engage in widespread abuse or market shoddy or unsafe products or services.  Now we need the Senate to side with consumers and pass this important legislation.”

Forced arbitration provisions are often found deep in the fine print of form contracts as a pre-condition for obtaining basic products and services, or a job.  Arbitration is a ‘black hole” process, where the law does not apply, there is no right of appeal, and the outcome is often required to be kept secret.  The arbitrator is chosen by the corporation, and has the incentive to heed the interests of the corporation, in hopes of repeat business.  The corporation can also choose where the arbitration will take place, what the rules will be, and who will pay the costs.

The FAIR Act, introduced by Representative Hank Johnson and Senator Richard Blumenthal, would prohibit corporations from forcing consumers, workers, and small businesses to agree to arbitration for a legal dispute before it arises.  Once a dispute actually arises, and the stakes are clear, they could choose arbitration if they determine it to be a better option than the courts.

Michael McCauley, mmccauley@consumer.org, 415-431-6747, ext 7606