This past year the United States Supreme Court dealt one of the most devastating blows to consumers yet, allowing big corporations to cheat Americans out of millions of dollars. In the case of AT & T Mobility v Concepcion, the Supreme Court ruled that a California’s prohibition of allowing corporations to waive class action lawsuit rights was trumped by the Federal Arbitration Act.
What is the result? Now companies can now tack on unlawful, small fees on consumer bills without threat of recourse, making it even easier for the American consumer to be exploited by corporate fraud.
Have you ever looked at a bill, like your cell phone bill for example, and been shocked by the many different little fees that are included which end up totaling to a large amount? Back before the Supreme Court Case of AT & T Mobility v Concepcion was decided, lawyers were able to meaningfully help consumers who were being cheated out of money by companies who were adding wrongful, exorbitant fees to their bills. While corporations may cheat one consumer out of just a few dollars or even a few pennies, added up that can amount to millions of dollars that corporations are illegally stealing.
No lawyer would be able to afford representing a consumer to sue for just a few pennies or dollars. The way lawyers were able to help consumers and deter corporations from exploiting the American consumer is through consumer class action cases. Consumer class actions acted as the “watch dog enforcer” to prevent or at least deter big corporations from cheating millions of consumers.
Unfortunately, the Supreme Court’s decision now stated that class action waivers in arbitration agreements must be enforced under the Federal Arbitration Act. This means all corporations need to do is include a mandatory arbitration agreement in the fine print. Thus, if any consumer gets cheated out of a few dollars, their only recourse is to go to individual arbitration. Obviously that is not worth the time and money for a lot of people. Nor would any attorney in their right mind, especially one who wants to keep their lights on and their doors open, be able to take a case like this. The result of course is that corporations have a blank check to cheat Americans out of millions of dollars without recourse.
How many times have you signed a credit card application, computer or cell phone agreement without reading the fine print? Do you know that most corporations will include a “mandatory arbitration” clause which waives your right to a lawsuit? Whereas courts were able to deem that part of the contract unconscionable and unenforceable prior to this Supreme Court decision, now the new law is binding. And corporations are going to have blanket protections from being held accountable because all they will now need to do is to include a “mandatory arbitration clause” every time they enter into a contract with anybody. And since most people don’t have a choice whether they sign up for a cell phone, credit card, or other service—since most every corporation will now include such an agreement—there is no fear or deterrence to corporations.
Previously, consumer class actions lawsuits were the only real deterrent that the little guy had against the big corporation cheating them out of money. Obviously, a company isn’t scared out of being sued over cheating someone over $10.00. They also know that every single individual consumer isn’t going to sign up for arbitration. What they do know now is that they have a blank check to cheating consumers out of millions of dollars without the threat of a consumer class action lawsuit.
Unfortunately, the Supreme Court decision gives corporations license to commit theft without ever having to face the consequences. They are able to make massive profits by cheating consumers and the decision robs Americans of any meaningful way to fight back.
Good Georgia Lawyer’s favorite advocacy group Public Citizen states that this is a dangerous decision which has impacts beyond consumer cases. Binding arbitration agreements can hit employees who sue their workers for discrimination, even if they haven’t signed a clause.
For years, Congress have proposed bills, such as the Fairness in Arbitration Act, designed to minimize corporations’ abilities to enforce fine-print lawsuit bans in consumer contracts. A form of such relief was passed as part of the Dodd-Frank financial reform bill which we have written about earlier.
The new Bureau of Consumer Financial Protection will study the issue, and after reporting to Congress, will have the right to restrict arbitration uses by companies. That agency’s fate however is still up in the air in this political climate.
Good Georgia Lawyer urges Congress to insure that the rights of American consumers are protected.