Arbitration: Is It Fair When Forced? Senate Hearing and Legislation

“Arbitration: Is It Fair When Forced?”

On October 13, 2011, Senator Al Franken (D-MN) presided over a Senate Judiciary Committee hearing titled: “Arbitration: Is It Fair When Forced?” Excellent testimony was presented on how binding mandatory arbitration deprives consumers of their day in court.   Citizen Works signed on to the coalition letter supporting this legislation.

On October 4, 2011, Senators Richard Blumenthal (D-CT) and Al Franken introduced the Consumer Mobile Fairness Act, S. 1652, to ban mandatory binding arbitration clauses in cell phone and mobile data service contracts.  This legislation is a direct response to counteract the Supreme Court’s 5-4 ruling in AT & T v. Concepcion, which prohibited consumers from bringing class actions in arbitration against companies.  The bill would invalidate any pre-dispute arbitration clauses in agreements and instead require that arbitration may only be used when both parties agree to do so after a dispute arises. 

In 2009, Fair Contracts’ research showed that binding mandatory arbitration clauses were included in most cell-phone contracts, with only a few exceptions.  These provisions prevent customers from pursuing their claims in court and force consumers to arbitrate their claims and waive their rights to jury trial and class action when they sign up for cell-phone service.   Public Citizen has a new report out documenting unfair wireless industry practices.

Unfortunately, the Senate bill (S. 1652) does not address other contract fairness issues such as late fees, early termination fees, and unilateral modification provisions.

In April of this year, the same two Senators introduced S. 987 to ban binding mandatory arbitration clauses in employment, consumer and civil rights cases.