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Arbitration Clause in DirecTV Consumer Contract Criticized

Thursday, January, 7, 2016


Mandatory arbitration clauses have taken many hits lately and are once again falling under scrutiny in the case of television service provider DirecTV. The company requires customers to use arbitration to settle disputes outside of the courtroom, barring class action lawsuits and making it so other consumers receive no details about the events of whatever settlement is reached. The decisions are also legally binding and customers have no option to appeal.

 

Most recently, DirecTV customers in California claimed they were charged illegal cancellation fees. In some cases, the customers were charged fees for moving and being unable to install the service in their new location, for enrolling and then finding out the service could not be installed, or for having faulty equipment that stopped working on its own. For some, these fees totaled up to nearly $500. Through arbitration, it was determined they could not join together to create a class action lawsuit against the company in an effort to correct the problem.

 

The California Court of Appeals ruled in 2014 that DirecTV’s arbitration clause was illegal and unenforceable, so class action lawsuits would be an option. However, a later ruling concluded the state law no longer applied and the mandatory arbitration clause in DirecTV’s contract was enforceable.

 

Consumer support groups were appalled at the most recent ruling and called it “… another troubling day for American consumers who are ripped off by corporate greed and malfeasance…” Believing the ruling to be an effort to take away the right of American consumers to have their day in court, a senior policy counsel at Consumers Union further explained “This decision hammers another nail in the coffin for consumer access to the courts…”