What's the Deal 2/6: Forced Arbitration

Whether you realize it or not, there's a good chance you have given up your right to take consumer problems, even serious ones, to court. The Troubleshooters have been warning you for some time now that you could be signing away your rights without even realizing it. Forced arbitration clauses have become more and more common when you sign up for things like credit cards and mobile services, when you shop online and also when you buy anything from appliances like washing machines to mattresses and even cars.

Experts at Consumer Reports are concerned accountability for bad company behavior may be harder to achieve, because more and more companies are adding what's called forced arbitration clauses into their sales agreements.

"Basically it means you're giving up your right to take a dispute to court. This is a constitutional right you have and you're giving it up even before you know that there's a dispute," said Scott Medintz, Consumer Reports Editor.

Arbitration clauses are typically buried in the fine print of product manuals and websites.

"The arbitrators don't technically have to follow the letter of the law - and if you're not happy with the result, you, you generally don't have a right to appeal," said Medintz.

And unlike a court of law, which is open and public, arbitration is private, with no public record. And arbitration doesn't allow people to join together in class actions to fight back.

"The concern is that companies are using arbitration to preemptively crush consumer objections to their practices, whether those practices are unsafe or predatory or even illegal," he said.

The best way to protect yourself is to buy from companies that don't make you forfeit your legal rights in advance. Unfortunately, the only way to know for sure is to read the fine print ahead of time.

And with these clauses being used by so many companies, in many cases, you don't have a choice. But hope may be on the horizon. The U.S. House of Representatives has passed a measure that would ban forced arbitration. It's now in the Senate.
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