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Senator Al Franken Introduces Arbitration Fairness Act

Friday, May, 20, 2011


The federal Arbitration  Fairness Act is a proposed law that has been before Congress in various forms over the years.  This week it was introduced into the legislative session once again.  Supported by US Senators Al Franken of Minnesota and Richard Blumenthal of Connecticut, as well as Representative Hank Johnson of Georgia, all Democrats, the proposed law would put an end to forced arbitration clauses in employment, consumer, and civil rights cases.

 

Arbitration Fairness Act Restores Balance of Power to Consumers

 

The issue of arbitration fairness is front and center after a Supreme Court decision in April 2011, which allowed companies to use forced arbitration clauses to ban class actions against them.  Senator Franken recognizes the fundamental unfairness of the court decision, remarking that the decision "essentially insulates companies from liability when they defraud a large number of customers of a relatively small amount of money."

 

Current arbitration practices have many serious issues when it comes to fairness.  For example, forced arbitration clauses require consumers to waive their rights to go to court, but allow the other party to the contract, typically a large corporation, to retain that right.  Perhaps even more seriously, such clauses generally empower the corporation to select the arbitration firm.  This is problematic because such firms then have a vested interest in pleasing the corporation; a decision in favor of the consumer could endanger future business prospects.

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