Watch Now The Live Senate Hearing On Whether Forced Arbitration Is Fair

Here’s a live webcast of the judiciary committee’s hearing on mandatory binding arbitration going on right now. The title of the hearing is “Arbitration: Is it Fair When Forced?” Arbitration clauses appear in all sorts of consumer contracts and they mandate that in order to use the product or service, you have to agree to give up your right to sue if anything goes wrong. Originally designed for businesses to expedite disputes with other businesses, binding arbitration clauses are now also a popular way for companies to strip consumers of their basic legal rights. Since the hearing is chaired by Senator Al Franken, you know there’s bound to be some good zingers. Pop the popcorn and sit back!

Go here and click on the “Webcast” button.

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  1. Tunnen says:

    Is it fair when forcing people that force arbitration to attend an arbitration on forced arbitration? =P

    • AlteredBeast (blaming the OP one article at a time.) says:

      Buffalo buffalo buffalo…buffalo….buffalo buffalo…buff….alo?

    • the Persistent Sound of Sensationalism says:

      You mean “Is it fair to force people that use forced arbitration to attend an arbitrary hearing on forced arbitration?”

      No one cares if it’s fair, but at least make grammatical sense.

  2. Buckus says:

    Cue the one-man mobile consumer rights activist rig!

    Seriously, though, this thing will go like all other Senate hearings:
    1. Grandstanding (Do you think this is fair, Mr Big Businessman?)
    2. Some sweating by Mr. Big Businessman
    3. After the hearing, Mr Big Businessman writes a check to the senator’s re-election campaign
    4. Nothing changes

    • bigroblee says:

      I don’t think Al Franken falls into this group. I personally believe he is one politician with some real scruples and a strong moral compass.

      • Buckus says:

        I think he is, too. Unfortunately, he is only one Senator of 100 and possibly the only one who is standing up, raising his hand, and asking the hard questions. Unfortunately, the other 99 Senators are busy telling him to keep quiet and don’t make a ruckus.

  3. StarKillerX says:

    SInce when has life been, or supposed to be, fair?

    • 85% Real 15% Filler says:

      It isn’t, but the government of a demecratic country should make every attempt to try ot make things fair on the things that can be controlled.

      • StarKillerX says:

        Okay then how about government hearings on the fairness of the Federal and State government taking a chunk of what people earning at work, before the person is even paid, and then uses it to support the crackheads, drunks and assorted lazy people across town?

        If you think this is about fairness you really need to open your eyes, this is simply Congressional grandstanding on a recent issue.

        • denros says:

          Uh ok… so we can’t pass any legislation until the whole goverment is deemed “fair” by you, the sole voice of the people?

          Serious question: Do you not want the government supporting crackheads because you secretly feel guilty for stealing all their ideas?

          • StarKillerX says:

            Well your obvious the one with sand in your vagina because of 100% volunatary good or service requires binding arbitration for issues while I’m asking who is basically saying fairness is not a guarantee.

            The issue as I see it is is say at&t contract requires arbitration and you don’t like it then don’t agree to it by signing it just as if you don’t agree to paying $500 a month on a car loan then don’t take out the loan.

            • suez says:

              That’s your actual head x-ray, isn’t it? Just wondering…

            • denros says:

              1. What? Seriously, do you *have* a backspace and / or delete button?

              2. Because you think it’s a great idea… is reason not to have a discussion about it? Let’s forget the word “fair” because apparently fairness is not a pursuable virtue in your book. Fine. Still, almost every law could be held by the same “standard” you’ve apparently drafted in your head, to make just about any behavior whose harm to others isn’t perfectly and immediately obvious. I mean, sure, monopolies seemed like harmless ideas back in the early 20’s- you don’t like railroad monopolies? Fine! Take the wagon train! Capitalism takes care of itself, always!

              • StarKillerX says:

                You mean as opposed to Congress should ignore the country going up in smoke so they can get facetime on the cause of the day? Next month, hearings on BofA $5 debit card fee.

                What you overlook is the simple fact that this mandatory binding arbitration isn’t forced on anyone, it’s agreed to when you sign the contract, if at&t has a requirement for mandatory binding arbitration and you oppose it then don’t sign the contract and show your disapproval by not supporting them.

                My issue is that people are getting to whimpy and so when they oppose something rather then taking a stand against it, and in this case not supporting companies that do it, they want the national nursemaid to step in to insure don’t have to stand by their principles because that could inconvenience them and we can’t allow that.

                • the Persistent Sound of Sensationalism says:

                  How to you “get to whimpy”? Is that a place?

                  Anyway, you pay taxes to have an infrastructure. If you don’t like it, try to realize that we have some of the lowest tax rates in the world, and we also pay some of the lowest tax rates in the history of the United States. You should be complaining about the billions of tax dollars that go to the wars in Iraq and Afghanistan; money that lines the pockets of disaster capitalists, which then line the pockets of our politicians so they can pay less in taxes than they already do.

                  • StarKillerX says:

                    As I do, although as this story has nothing to do with either of those I didn’t raise the issue.

            • David Doe says:

              And your also a misogynistic piece of crap too eh?

    • autonym says:

      Since when does this rhetorical question mean anything to anyone besides children or criminals?

    • Tim says:

      Seventh amendment:

      In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.

      • ARP says:

        Except that numerous cases say that you can make a “knowing and intelligent” waiver to your Constitutional rights…except where you can’t.

    • SteveinOhio says:

      Who said anything about life? We’re talking about contracts.

    • kujospam says:

      The whole idea of capitalism is based off of fair trade value. Smith even said that should one side know more then one side over the value that you can’t have fair trade, and therefore cannot a fair market.

  4. Cat says:

    Forced arbitration is never fair when it’s forced on consumers. Corporate America would not be so gung-ho for arbitration if it was fair to consumers.

  5. French_Toast says:

    Ah, just when it was getting good, they go into recess.

  6. AlteredBeast (blaming the OP one article at a time.) says:

    What if, you know, we all stopped using items that included forced arbitration?

    Oh, that’s right, because everyone wants to complain but nobody wants to give up their first world luxuries.

    • mauispiderweb says:

      Just curious … which common consumer items have forced arbitration?

    • dolemite says:

      Well, just about every single company is moving towards it, so you’d have to give up video games, tv, rental agreements, cell phones, car loans…blah blah.

      So I guess if you became Amish you’d be ok.

      • AlteredBeast (blaming the OP one article at a time.) says:

        Well, yes and no.

        The things you mentioned are common, but not necessities. You can do without video games, car rentals, car loans, cell phones, high speed internet, etc. Want to go online? Go to the library. Want a car? Buy a used one for $1,000. Want tv? Hook up an antenna. Want to play video games? Buy anything older than this gen.

        You don’t have to give up modern day items, just roll back how you pay/sign up for them.

      • Tim says:

        And don’t get a job, while you’re at it.

    • autonym says:

      If we stopped using all of these “first world luxuries” our economy would tank, utterly. We would no longer be a first world country without our products and services, genius.

      • AlteredBeast (blaming the OP one article at a time.) says:

        Companies will abandon forced arbitration long before then, because they won’t be making profits anymore.

        • AlteredBeast (blaming the OP one article at a time.) says:

          EDIT: Seriously, I can’t believe someone thinks the whole economy would tank if we stopped using goods and services that included forced arbitration.

          Once companies see what is happening, and why, then they will change policy. Then you can use them again. And money will flow again. Plus, prior to that, you could still put money into companies that do not have forced arbitration. It’s not like you aren’t spending ANY money. And if the companies refuse to drop forced arbitration before the economy falls apart, then the Senate has their answer regarding forced arbitration, and will ban it to save the economy (by renewing consumer trust).

          • ARP says:

            Here are some of the industries that use forced arbitration: mobile phones, internet, car sales, banking. So you’re saying, there would be little effect on the economy if we stopped using these things?

            • AlteredBeast (blaming the OP one article at a time.) says:

              It would be a large effect. But before it sent us into an economic crisis, the companies in charge of those industries will see (or be told) why people opt not to use them anymore, so they then change their policies.

    • ballistic90 says:

      Jobs are a first world luxury? Shelter? Utilities? Personal transportation? Nearly every industry is adopting, or in the process of adopting Forced Arbitration. Forced Arbitration has shown up in many a job contract, which in a time of desperation is a bullsh!t tactic. The free market doesn’t work if every company uses the lack of options as leverage to put their customers through garbage.

      Forced Arbitration is being used in employee contracts to allow companies to get away with kidnapping and letting their employees gang-rape other employees. Companies have too many rights as it is, and this needs to go immediately.

    • Jawaka says:

      The problem is that practically nobody reads the terms of use that comes with most products and services. On one hand I blame the consumerist for being lazy but on the other hand most of these documents are over a dozen pages long and written in legalese. If forcing people into forced arbitration is accepted then I think that the companies that do so need to make this fact a lot more clear at the time of purchase.

  7. Downfall says:

    Calling it “forced” arbitration is a bit whimsical, given that it’s a term you agree to when you contract with the relevant counterparty. By that logic, everything you agreed to is “forced”– zomg, my gym forces me to give them $40 a month! Not to mention that HSBC “forces” me to pay $500/month for some silly car loan that I agreed to. The ubiquity of the practice and the lack of competitive advantage from omitting an arbitration clause suggests that consumers don’t really care about this issue. Nor is it clear that they would be better off if they were forbidden– only a tiny fraction will actually end up wanting to sue, but everybody would incur the increased costs. Even a completely frivolous claim can be very expensive to fight off in traditional court.

    • bendee says:

      It’s forced in that many industries have no other option: You want a phone (either landline or cellphone)? Arbitration. Credit card (needed instead of a debit card for many things such as renting a car)? Arbitration.

    • zerogspacecow says:

      Normally I would agree with your point, but in this case it’s a little different.

      As an example, I just bought a new Kia, and had to sign an arbitration agreement. Now, what you’re saying is that I had a “choice” because I could have gone with another dealer, or manufacturer, or bought used. But, as far as I know, those arbitration agreements are pretty much industry standard. So, going with another manufacturer or dealer wouldn’t have helped. And, even if that weren’t the case, I’d basically have to make a decision between getting the best car for my money, or being limited to whichever company happens to not have an arbitration agreement. Which is basically no choice at all.

      Your argument only makes sense if: a) there are WORTHY competitors that DON’T have an arbitration agreement, who offer a product you want and are able to purchase.

      Let’s say Mercedes didn’t have an arbitration agreement. Does that mean I’d go and buy one instead of a Kia? No, because either way I can’t afford a Mercedes and it’s not practical. A used car might have been an option, but I don’t trust used cars (after having a great deal of used cars that didn’t last more than a few months).

      So, I was stuck signing the arbitration agreement, and it certainly felt like I was “forced” to.

    • fortymegafonzies says:

      While “forced” might not be accurate in the strictest technical sense, I don’t feel its use here is without merit. While once can make his way in the world without any phone, or internet access (among other things), it puts him at considerable disadvantage in society and severely limits what opportunities are available to him. This is very similar to “implied consent” laws regarding driving and breathalyzer tests. The logic of the gov. is that you’re not “forced” to consent to a warrantless search, all you have to do is simply never, ever drive a car if you don’t want to be searched. Things like phone, internet access, or driving a car have become so ingrained into our society, that I would argue that any conditions imposed upon them can more-or-less be said to be requirements, thus the therm forced.

    • sirwired says:

      If there are no meaningful negotiations possible (as with a boilerplate contract), what is considered a “reasonable” contract term is very different. Signing away what is otherwise a basic civil right (the right to sue) is right on the borderline.

    • Tim says:

      If arbitration is so great, why can’t both parties be free to choose whether to use it on a case-by-case basis? Verizon jacks up my rates 4,000%. I tell them I want to sue. Verizon says hey, arbitration would be cheaper and quicker. Okay, I say, let’s do it!

      Instead, we have to agree to try ANY problems in arbitration, even before anyone knows what the problem is. How does that make sense?

      Secondly, if they’re so great, why can’t they be appealed in a normal court? Shouldn’t a normal court find that the arbitration was completely fair and legal?

      • cf27 says:

        Because litigation is often far more expensive for defending companies than it is for plaintiffs — the lawyers are more expensive and discovery places a far greater burden on the party with all the information, who is typically the defendant. That difference in cost was long used to push companies into settling non-meritorious claims, just to avoid the cost of arbitration.

        There are some cases where arbitration really is abusive — car sellers, for example, often require arbitration in an arbitration forum set up specifically for them. But, those problems disappear with AAA or JAMS arbitration.

        The funny thing here is that many companies go out of their way to make the process fair. AT&T’s terms, for example require them to pay your costs of filing the arbitration and allow you to go after them in Small Claims Court.

    • JGKojak says:

      If every competitor to the product you want (say, a cell phone) includes forced arbitration, then it is forced.

      and we are coming to a point when necessary things like car insurance all include forced arbitration clauses.

      From a legal standpoint – arbitration clauses should not be allowed to circumvent your rights under other laws (the ADA, for instance).

    • dolemite says:

      I recall reading somewhere that where a consumer and a company go into arbitration, they arbitrator finds in favor of the company 80+% of the time. I mean..why wouldn’t they? They are hired by the company.

      • Buckus says:

        I think you’re right, except for the percentage: it’s like 98%. Yeah…it’s totally fair. Like a bank hiring the appraiser during the house-buying process….oh…

    • SteveinOhio says:

      A couple of things:

      1) Forced arbitration is particular popular for companies with minimal competition offering consumer services that are necessary to function in the modern world. It would be very difficult to live a 20th century existence, let alone a 21st century existence, while deftly avoiding all forced arbitration clauses. You have to revert to Little House on the Prairie to avoid these arbitration clauses; a testament to how pervasive they have become.

      2) In many cases, I have seen forced arbitration show up in EULA’s that I could not have agreed to prior to purchasing the product/service in question. I realize this is mixing issues, because EULA’s are themselves controversial in that you can’t have them shown to you at the point of sale, but it all points to a cultural and legal system where large corporations are wielding power that an individual consumer can’t combat.

  8. WarOtter - I went to Japan and all I got was this tumor. says:

    Watch a webcast of a senate hearing? Yeah, this will keep me from falling asleep at work….

  9. IgnoramusEtIgnorabimus says:

    Not fair AND illegal, what if I want to force a customer into respecting Mexican laws because they would be on my side and have excessive punishments on the customer, can I impose the courts of a different nation onto the customer as well?

  10. deathbecomesme says:

    F U John Cornyn and your stupid talking points handed to you by big business.

    • ARP says:

      you mean “job creators” don’t you?

    • SecretAgentWoman says:

      OH GOD THIS. He’s my senator, but I sure as hell didn’t vote for him. I hang my head in shame whenever he opens his stupid mouth!

      • deathbecomesme says:

        He is mine as well. I don’t know how he keeps his job. The fact that we Texans keep electing him shows how ignorant some of us can be. He’s so far into big business pockets its painfully obvious and yet us poor Texans still vote for him.

  11. dragonfire81 says:

    What an oddly worded headline…

  12. Tim says:

    I’ve said this before and I’ll say it again: if arbitration is so good, why can’t consumers be free to choose arbitration when a dispute actually arises?

  13. Black Knight Rebel says:

    Any chance of this coming out as a free download (like a podcast) some time later? I’m already an hour late and I don’t have time until the weekend to check it out.

    Any help?

    • Tim says:

      Check the committee’s website after it’s over (the link is in the post). They frequently post archives.

  14. JayPhat says:

    “Watch Now The Live Senate Hearing On Whether Forced Arbitration Is Fair”

    It’s not. I could have saved you the thousands this thing cost.

  15. DrPizza says:

    Some of you that don’t see a problem with this are overlooking how far this trend can go:

    “By operating this vehicle, you agree not to sue motorcompany. In other words, if our product is faulty due to our negligence, resulting in a fiery crash that kills your loved ones, the best you’re going to do is meet with some arbitrator who definitely isn’t going to adequately compensate your for the loss of your loved ones – just a new car maybe… or how about a refurbished car?”

  16. AmateurD says:

    Wow, the absolute sleaze dripping off of these defenders makes my skin crawl. The amount of question ducking Schwartz is making should give him whiplash. At what point does he start asking for what the panel’s definition of “is” is?

  17. deathbecomesme says:

    Al Franken: “The unibomber could have avoided an arbitration clause”

    lmao. Love his wit

  18. mike says:

    On the one hand, it’s not really forced since you sign a contract. On the other hand, it’s forced because you really can’t go anywhere else without having it in the agreement.

    If only cell phones weren’t so much apart of our everyday lives, I might be okay with an arbitration clause. But because they are, I hate being forced into arbitration.

    • SteveinOhio says:

      How about car insurance? It’s mandated by the state, and every insurer forces arbitration as a condition of the policy. If you walk away from arbitration clauses, you’ll be walking everywhere.

  19. bigroblee says:

    I don’t think Al Franken falls into this group. I personally believe he is one politician with some real scruples and a strong moral compass.