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Senate OKs bill to end forced arbitration for sexual assault and harassment claims

Consumer Reports calls on Congress to extend protections to consumers and workers by passing the Forced Arbitration Injustice Repeal (FAIR) Act 

WASHINGTON, D.C. —  Survivors of sexual assault and sexual harassment will no longer be forced to give up their rights to seek justice in court and required to pursue their claims through mandatory arbitration under a bill passed with bipartisan support today by the Senate. H.R. 4445, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, was approved by the House earlier this week and is expected to be signed into law by President Biden.

Consumer Reports joined a wide-ranging coalition of organizations that urged lawmakers to approve the legislation. CR is now renewing its call for Congress to more broadly end mandatory arbitration clauses that unfairly restrict the rights of consumers, workers and small businesses by passing the Forced Arbitration Injustice Repeal (FAIR) Act.

“The bill approved today restores the right of those who have experienced sexual assault or sexual harassment in their workplace to hold the abusers accountable in court, rather than being shunted off into a closed-door arbitration stacked in favor of the powerful,” said George Slover, senior policy counsel for Consumer Reports.  “The strong bipartisan support for this bill shows a clear recognition that forced arbitration is fundamentally unfair. We hope this adds momentum to efforts in Congress to end forced arbitration once and for all.”

“No one should be forced to give up their rights to seek justice in court through binding arbitration clauses or class action waivers that have become all too common,” said Syed Ejaz, policy analyst for Consumer Reports. “Congress should protect consumers, workers, and small businesses from this spreading injustice in the marketplace by passing the FAIR Act and ending forced arbitration.”

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.

To document how common these forced arbitration clauses have become, Consumer Reports reviewed consumer products in the most popular product categories it rates – and in two additional categories where safety is a paramount concern, bike helmets and child car seats – and published its findings in 2020.  Of the 117 brand/category combinations examined, 60 percent included arbitration clauses. 

Under the FAIR Act, introduced by Representative Hank Johnson and Senator Richard Blumenthal, corporations would be prohibited from requiring consumers, workers and small family businesses to give up fundamental legal protections as a precondition 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 determine it to be a better option than the courts.

Michael McCauley, michael.mccauley@consumer.org, 415-902-9537