When asked to update terms and conditions on the app, I didn't pay attention to what Spotify wanted, though it included the word "arbitration."
That's what most people do with contracts, especially the little-money items. I just wanted my old-school Prince song.
It's not until something goes wrong that the fine print gets a read, and it's never good news for the average consumer.
This week, after more than a year since the Consumer Financial Protection Bureau posted a rule change on the Federal Register, the director of the agency announced that companies can no longer use mandatory arbitration clauses to deny groups of people their day in court.
These are those little-noticed passages in contracts that prevent consumers from banding together in class-action lawsuits and, instead, forces them into arbitration.
Although arbitration sounds like a middle-ground and cost-effective solution, it has turned into a David-and-Goliath story in many cases.
A brief history: The journey to arbitration's powerful and controversial position started with the 1925 Federal Arbitration Act, which had a narrow focus on "maritime transactions and contracts." It was expanded to become a private process for companies to enter into arbitration for legally binding resolutions.
The situation was meant for entities of equal bargaining power.
As time went on, businesses started pushing the boundaries on how far to use mandated arbitration, with it really taking off in the 1990s as corporate lawyers sought a way to cut down on class-action lawsuits. Now, these clauses are in hundreds of millions of contracts.
It helps to understand how arbitration works. It's a private process overseen by a mediator - usually a retired judge or attorney - in legal offices to find a solution to a consumer dispute. Parties are commonly barred from talking about what happened.
So it's a pretty secret deal.
The New York Times published a series in fall 2015 outlining the abuses of the clauses and conflicts of interests among mediators, including a case involving Supreme Court Chief Justice John Roberts. Reporters showed how consumers had few options, and court rulings favored arbitration even when those rulings did not pass legal muster.
Tulsa (OK) World Op-Ed: Great Explanation of How Forced Arbitration Has Been Distorted Into an "Get Out of Jail Free" Card for Corporate Crimes Instead of a Tool for Businesses
Any American with a phone or a credit card or a bank account should read this great editorial by a reporter for the Tulsa (Ok) World. Read the complete piece here.
“Corporate Immunity Bill” Would Let Investment Firms Steal Money from Workers’ Retirement Accounts
The Consumer Financial Protection Bureau (CFPB) today announced a new rule to ban companies from using mandatory arbitration clauses to deny groups of people their day in court. Many consumer financial products like credit cards and bank accounts have arbitration clauses in their contracts that prevent consumers from joining together to sue their bank or financial company for wrongdoing. By forcing consumers to give up or go it alone – usually over small amounts – companies can sidestep the court system, avoid big refunds, and continue harmful practices. The CFPB's new rule will deter wrongdoing by restoring consumers' right to join together to pursue justice and relief through group lawsuits.
AT&T: it's not "forced arbitration" because no one forced you to have broadband
Student Loan Collections Push Older Borrowers into Poverty
Des Moines Register EDITORIAL: Trump protects nursing homes at seniors' expense
Last week, the Centers for Medicare and Medicaid Services proposed a rule rescinding an Obama-era regulation prohibiting nursing homes from requiring patients and their families to sign binding arbitration agreements. Signing those agreements, which are frequently part of admission paperwork, means giving up the right to sue a facility.
Bernie Madoff rots in prison, tortured by one question: "Why, Oh why didn't I just use forced arbitration clauses! I could still be raking it in!"
Criminal Bank Seeks to Use Forced Arbitration to Avoid Justice
After Promising to Make Things Right, Wells Fargo Asks Judge to Kick Defrauded Consumers out of Court
June 6, 2017
Contact: Amanda Werner, firstname.lastname@example.org, (202) 973-8004
Tomorrow, a federal judge in Utah will decide whether more than 50 consumers defrauded by banking giant Wells Fargo in its fake account scandal will be forced to pursue claims one-by-one in a secret arbitration system. As the bank loudly promises to restore consumer trust, Wells Fargo is quietly insisting that defrauded customers should be barred from holding it accountable in court by pointing to “ripoff clauses” buried deep in its contracts.
Customers represented in Mitchell v. Wells Fargo argue that the bank cannot use its contracts as a shield against liability for systemic fraud. While forced arbitration has been upheld in many contexts, the customers claim they could not reasonably understand that signing a standard agreement for one product would block them from suing over a separate account they never agreed to open. Indeed, at least one consumer represented in this class action never even banked with Wells Fargo or signed an account contract.
Experts from the Fair Arbitration Now (FAN) coalition are available to comment on this hearing, as well as a forthcoming rule from the Consumer Financial Protection Bureau (CFPB) that would restrict the use of arbitration clauses in future consumer financial contracts. Please contact email@example.com to speak with an expert in the FAN coalition.
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Every single seat should be filled for this talk. If you have a teen or young adult close to you, bring them with you so they can hear -- as will only be possible for a few more years -- from a survivor of what happens when a mighty nation is more concerned with being feared for its power than respected for its wisdom.
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John Gear is a Salem attorney in solo practice