November 14, 2014
A consumer should not be forced to give up his constitutional right to a trial by jury in order to receive banking services, financial advice, etc. This is a ridiculous situation that has only lasted as long as it has due to the corruption of our political system.
With mandatory binding arbitration, the consumer has no access to the public courts no matter what crimes a financial firm may have committed against him. I have seen cases of fraud, forgery, and other laws broken, and the consumer still has no right to have his claims heard by a jury of peers. Instead, the victim of the bankers crimes is forced to submit his claim to a biased forum controlled by the financial industry itself. How is that in any way fair?
Moreover, corporations, jubilant by the success theyve been having in shielding themselves from liability, are going further and further. Many have taken the step of banning class action suits, and the Supreme Court recently ruled that this is enforceable. Here are telling words from the dissent: If the arbitration clause is enforceable, Amex has insulated itself from antitrust liability — even if it has in fact violated the law. The monopolist gets to use its monopoly power to insist on a contract effectively depriving its victims of all legal recourse. At what point do we say enough is enough?
Finally, arbitration enables firms to keep their nefarious practices secret, rather than making claims public record and allowing for full discovery as would be done in court. Here is an excerpt from a recent New York Times article: As a result of a 1987 Supreme Court decision, brokerage firms have been able to insist that customers give up their right to sue in court before they can even open an account. The resulting transfer of investor lawsuits to private arbitration has meant that Wall Street firms and their employees have avoided the burden of a court record of claims against them for a quarter-century. True enough. Consumers are kept in the dark, oblivious to the treachery that awaits them when they trust and rely on their financial advisor.
If arbitration were as good for consumers as the financial industry professes, then consumers would choose it willingly. And this is fine. Let the financial industry set up an arbitration forum that consumers willingly choose, and Id be all for it. But it should not be forced on consumers before they even know what crimes are about to be committed against them.
In summary, it is preposterous that banks should be able to shield themselves from liability through contracts couched in legalese that consumers have no choice but to sign. The European Union classifies pre-dispute consumer arbitration clauses as unfair terms. In France, such agreements are considered unfair and unenforceable. In Japan, consumer arbitration agreements can be revoked by the consumer at any time up to the arbitration hearing. Why dont U.S. citizens deserve the same protections?