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CR endorses the FAIR Act to end forced arbitration

Bill would prohibit corporations from forcing consumers, workers, and small businesses to resolve disputes through arbitration 

WASHINGTON, D.C. – Consumer Reports today endorsed the Forced Arbitration Injustice Reversal (FAIR) Act, a bill that would prohibit corporations from forcing consumers, workers, and small businesses into mandatory arbitration to settle disputes, and cutting off their ability to go to court.

“Forced arbitration is stacked in favor of corporations and shields them from being held accountable for breaking the law and other misconduct,” said George Slover, senior policy counsel for Consumer Reports.   “Arbitration provides none of the fundamental safeguards that are the hallmarks of a fair, impartial, and accessible court proceeding.  The FAIR Act will help restore the rights of consumers to hold corporations accountable when they have engaged in widespread abuse or marketed an unsafe product or service.”

Under the FAIR Act, introduced by Representative Hank Johnson and Senator Richard Blumenthal, corporations would be prohibited from requiring consumers, workers and small businesses to relinquish their fundamental legal protections as a pre-condition for obtaining a product, service, or job.  Once a dispute actually arises, and the stakes are clear, consumers, workers or family businesses could choose arbitration if they determined it to be a better option than the courts.

In its letter to Senator Blumenthal and Representative Johnson supporting the FAIR Act, Consumer Reports notes that forced arbitration provisions are often found deep in the fine print of contracts as a pre-condition for obtaining basic products and services such as a credit card, bank loan, apartment lease, or mobile phone.  Arbitration is a ‘black hole” process, where the law does not apply, there is no right of appeal, and the outcome is secret.  The arbitrator, chosen by the corporation, 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 how the costs will be borne.

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