CONSUMERS - USE EXTRA CAUTION
WHEN BORROWING OR BUYING
YOU MAY BE GIVING AWAY YOUR LEGAL RIGHTS
READ BEFORE YOU SIGN!
Car dealers, credit card companies, banks and retail lenders insert "mandatory pre-dispute arbitration clauses" in the fine print of consumer contracts. These clauses mean that the consumers waive their rights to bring legal action in case there is a dispute with the company. Rather, the consumer agrees that any dispute will be resolved by an arbitrator selected by the car dealer or credit card company. Usually, the consumer does not know that he or she is waiving that right. Car dealers are among the most prolific users of mandatory arbitration clauses. As a result of mandatory arbitration clauses, thousands of consumer disputes are decided not by a judge or jury but rather by a private arbitration company. However, a notable exception has been carved out from the Federal Arbitration Act for the car dealers. At the request of car dealer lobbyists, Congress has expressly prohibited automotive manufacturers from requiring car dealers to arbitrate to settle their disputes. Clearly, the car dealers do not want the consumer to have the same rights as the car dealers. However, there may be help for the consumers on the horizon. Congress, although slowly, is taking action to help the consumers avoid oppressive arbitration agreements. The Senate, through the leadership of Senator Russ Feingold and others, is reintroducing legislation to protect the consumers' rights to have their day in court. Similar legislation was previously introduced in the House of Representatives. The House and Senate Bills are each referred to as the Arbitration Fairness Act of 2009. The full text of the Senate Bill, S. 931, can be found at www.govtrack.us/congress/billtext.xpd?bill=s111-931. Likewise, the House Bill, H.R. 1020, can be found at www.govtrack.us/congress/billtext.xpd?bill=h111-1020. These bills stand to eliminate mandatory pre-dispute arbitration clauses in contracts for consumers and employees. The bills currently sit in committee in both the House and the Senate. Support in the House grows but there has not been any additional co-sponsors in the Senate in several months. Show your support and write your Senator and Congressman expressing your support for the relief badly needed by consumers. Some final words of caution - when you attempt to buy a car from a dealership representing an automotive manufacturer (GM., Chrysler, Toyota, etc.) and the dealer requires that you sign a pre-dispute arbitration agreement, WALK AWAY! Then you should ask the dealer why is it that an arbitration agreement is required for the consumer but the automotive manufacturer the dealer buys from cannot require the dealer to submit to pre-dispute arbitration. Below is an example of the oppressive language in the arbitration agreement that the dealers require if you want to buy a car. Notice the rights the consumer is surrendering. Dispute Resolution Clause (EXAMPLE) This Dispute Resolution Clause applies to any claim or dispute between the Purchaser and the Dealer arising out of or related to this sale or transaction including but not limited to any and all issues or disputes arising as a result of this sale whether said issues arise prior to, during or after the sale or attempted sale of a vehicle. The Purchaser and Dealer agree that all matters addressed within this clause shall be submitted to binding arbitration with an arbitration service of the dealer's choosing. The parties agree that the arbitrator shall have authority provided for by the law and contract including but not limited to authority to grant an award for money damages, consequential damages or injunctive relief. The arbitrator's award will be entered as a judgment in a court having jurisdiction over the parties. The Purchaser and Dealer acknowledge and understand that they are waiving their right to a jury trial by entering into this agreement. The party filing the arbitration claim [usually the consumer] shall be responsible for the filing fee. The arbitrator's fee shall be equally divided between the parties. The prevailing party shall be entitled to attorney fees and costs as allowed by Oklahoma and/or Federal Law. Dealer and Purchaser agree that if Dealer must hire legal counsel or defend Dealer's legal rights under this Dispute Resolution Clause, Purchaser will pay to Dealer its attorney fees and costs incurred in Dealer's successful defense of Dealer's rights hereunder. On the other hand, any act or practice declared to be a violation of the Oklahoma Consumer Protection Act shall render the violator liable to the consumer for the payment of actual damages sustained by the consumer and cost of the litigation including reasonable attorney fees. Even when the consumer is the non-prevailing party, the consumer is responsible for costs and attorney fees only when there is a finding by the Court that the consumer's claims or defense were brought in bad faith, not supported by the facts or were unwarranted by existing law or good faith argument for the modification or reversal of existing law. There are other major disadvantages to the consumer for agreeing to a pre-dispute arbitration agreement. First, the consumer has no reason to agree in advance what forum should decide a dispute without knowing any of the particulars of the dispute. Next, by agreeing in advance what forum your case will be decided, the consumer does not know the advantage or disadvantage of arbitration versus a trial in a court of law before a judge and/or jury. In Oklahoma, a consumer who has a claim or claims with merit can normally find a consumer protection lawyer who will take the case on contingency. In Oklahoma, the court costs to file a civil lawsuit is $212.00. If your case goes to arbitration, the consumer's initial costs can be as high as $2,500 or more depending on the amount claimed for damages. There is virtually no review of the arbitrator's award by a court. The arbitrator's decision is given to the parties several days or even weeks after the arbitration. Furthermore, the arbitrator's award simply identifies the prevailing party and the amount of the award, if any. The arbitrator provides no analysis of the law or review of the evidence found to be persuasive. In other words, the parties have no idea how or why the arbitrator decided the case. Then there is always the subject of bias. Judges are members of the local state bar and further subject to the review of the Committee on the Judiciary. Arbitrators are not subject to any such review. Potential bias with the arbitrator has always been a concern certainly from the consumer's perspective. Attorneys and consumer advocacy groups have frequently claimed that arbitrator services are biased against consumers. The National Arbitration Forum ("NAF"), is one of the largest dispute resolution companies in the United States. The company claims to have a panel of nearly 2,000 arbitrators, mediators and attorneys and judges who arbitrate or mediate disputes. Recent studies of NAF indicate that over 90% of the cases between consumers and businesses were decided in favor of the business. The Minnesota Attorney General took the investigation of NAF a step further and brought an action against NAF claiming that NAF had influenced credit card companies to put mandatory arbitration clauses in their contracts naming NAF as the arbitrator. The Attorney General further found that the NAF had extensive connections with the debt collection companies and was not an independent company and should quit representing to the public that it is. In response to the Attorney General's case, NAF agreed to stop accepting new consumer arbitrations and will permanently stop administering any arbitrations involving consumer debt. In the final analysis, the specific rights provided to consumers under Oklahoma law are stripped away by the pre-dispute arbitration agreements. So, think hard and long before you sign.
