No one but lawyers enjoys suing people. So sitting down and talking through a problem sounds like a noble idea. But if you've agreed to arbitration in the contracts you've signed for everything from your job to your cell phone, there's a good chance you signed up to be screwed.
These agreements are usually heavily rigged in favor of the company. So if you've been defrauded by your credit card company or swindled out of overtime pay, you may have given away any recourse.
Instead, your beef goes before private arbitrators who make binding decisions that don't even have to be based on the law.
U.S. Sen. Al Franken (D-Minn.) thinks forced arbitration is an underhanded violation of people's rights. He plans to introduce a new bill to ban the practice.
A report from the U.S. Consumer Financial Protection Bureau shows that 75 percent of credit card users surveyed had no idea what an arbitration clause was -- even after they'd agreed to one. About half of all credit card companies use them, as do 88 percent of cell phone companies.
Whenever attorney Tim Selander discovers that a client has unwittingly signed such a contract, he knows he's fighting a company that's wielding a get-out-of-jail-free card.
Selander has a couple of Minnesota clients who are trying to recover overtime pay from their Texas employer. Because they checked a random box on some electronic company contract, he now has to fly down to Texas to attend some pre-arbitration mediation that his clients are getting billed for.
"Not to mention, if this were litigation, I would be able to ask the court to force the company to provide basic information like the clients' personnel records and their time sheets," Selander says. "I repeatedly request this information over six months, and what I get is incredibly inadequate, so I'm sort of just stuck going forward here."
Other lawyers won't even take clients if they've signed agreements.
Selander says he and his partners have sued tons of businesses, from strip clubs to major corporations. Arbitration rules often gag workers from speaking to reporters and demand they relinquish the right to a class action suit, one of the few ways to fight back if a company has systematically ripped off a large number of people.
The only way he can defeat arbitration, Selander says, is by filing enough individual claims that it starts to resemble a class action suit.
"It's painful for us, it's painful for them, but in order to defeat this, that's the extent that we have to go to," Selander says.
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