What is a Forced Arbitration Clause?

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February 7, 2017
Colson Hicks Eidson

AAJ President and Florida Attorney Julie Kane Explains Forced Arbitration Clauses

Companies put arbitration clauses into contracts so they can force consumers who have been wronged to arbitrate cases instead of filing a lawsuit. In this video, dispute resolution attorney Julie Kane explains how forced arbitration clauses give corporations a license to steal from hardworking Americans. These contracts allow businesses to choose who will arbitrate cases, and where, at a great cost to consumers. As the President of the American Association for Justice, attorney Julie Kane is dedicated to standing up to businesses who deprive consumers of their basic rights.

Video Transcription

As president of the American Association for Justice, I’m excited and honored to lead this organization into 2016-17. We do amazing work and protect the rights of victims and consumers across this country. We’ve done spectacular work related to forced arbitration and are working hard, both with agencies and with congress to try to minimize the effect of forced arbitration on people’s consumer contracts. Forced arbitration is something where a corporation puts something into a contract before there is a problem, before there is a dispute, before there is anything to complain about, and forces a consumer to go and arbitrate a case, often times with arbitrators the corporation chooses, at a location the corporation chooses, at a great expense to the consumer. For example, in a banking instance, someone who went to an ATM that is marketed by his own bank. That ATM had his banks logo on the top of it. And his contract with his bank says, if you go to an ATM with our logo on top of it, you’re not going to pay fees. He was out of the country. He went to a bank with his logo on it. He used an ATM with the logo of his bank on it. And he was charged a fee. But in his contract, he has a forced arbitration clause. For a $7 fee that was repeated several times during the course of a trip, it would cost him tens of thousands of dollars to arbitrate that claim. Furthermore, under cases that the United States Supreme Court has recently ruled, you can’t have a class action in forced arbitration. So if there are a group of people with that same complaint, that same fee, and that same forced arbitration, sometimes a class action will give them an avenue to get justice and to make the bank fix what they’re complaining about. Because of the class action ban and forced arbitration, they can’t have justice. It costs them thousands of times more to fix the problem than the problem itself and so essentially it’s a license to steal for corporate America. To reach an attorney at Colson Hicks Eidson, please call us at 305-476-7400 or you can find us on the web at Colson.com.