Friday, July 23, 2010

Arbitration Fairness

The U.S. Supreme Court's recent ruling in Rent-A-Center v Jackson, "dealt a major blow to consumers and employees who seek to challenge arbitration agreements on the ground that they are unfair or unconscionable", instead, upholding the authority of arbitrator to rule on the validity of agreements to arbitrate, relegating American workers to arbitration proceedings that can be structurally biased to favor large corporations, showing once again how the Supreme Court favors corporations and unfairly disadvantages hard-working Americans.

However, President Obama, by signing into law the new Consumer Financial Protection Bureau (CFPB), under the just-passed Wall Street Reform Act, helps limit the use of abusive forced arbitration clauses in financial contracts.

“The new CFPB will help address the abusive forced arbitration practices used by banks against consumers. Congress must now pass the Arbitration Fairness Act to ensure these predatory clauses are banned once and for all.” -- American Association for Justice President Gibson Vance.
Two other bills have been introduced in Congress to stem the abusive practice of forced arbitration:

Arbitration Fairness Act 2009 - sponsored by Sen. Russ Feingold (D-Wis.) and Rep. Hank Johnson (D-Ga.), would ensure that the decision to arbitrate is made voluntarily and after a dispute has arisen, so corporations cannot manipulate the arbitration system in their favor at the expense of consumers and employees.

Fairness in Nursing Home Arbitration Act (S. 512 / H.R. 1237), sponsored by Sen. Herb Kohl (D-Wis.) and Rep. Linda Sanchez (D-Calif.), would eliminate forced arbitration clauses in nursing home contracts.

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