AT&T Uses Forced Arbitration To Overcharge Customers, Senators Say (arstechnica.com)

An anonymous reader quotes a report from Ars Technica: Five Democratic US senators allege that AT&T's use of forced arbitration clauses has helped the company charge higher prices than the ones it advertises to customers. The senators pointed to a CBS News investigation that described "more than 4,000 complaints against AT&T and [subsidiary] DirecTV related to deals, promotions and overcharging in the past two years." But customers have little recourse because they are forced to settle disputes with AT&T in arbitration, according to Sen. Al Franken (D-Minn.), Richard Blumenthal (D-Conn.), Ron Wyden (D-Ore.), Patrick Leahy (D-Vt.), and Edward Markey (D-Mass.). "Forced arbitration provisions in telecommunications contracts erode Americans' ability to seek justice in the courts by forcing them into a privatized system that is inherently biased in favor of providers and which offers virtually no way to challenge a biased outcome," the senators wrote in a letter yesterday to AT&T CEO Randall Stephenson. "Forced arbitration requires consumers to sign away their constitutional right to hold providers accountable in court just to access modern-day essentials like mobile phone, Internet, and pay-TV services." Forced arbitration provisions such as AT&T's also "include a class action waiver; language which strips consumers of the right to band together with other consumers to challenge a provider's widespread wrongdoing," they wrote.

Comments

Enforcable?

[McGregorMortis]

There are many common contract clauses that courts have found to be unenforceable. Arbitration-only and class-action-blocking clauses both seem like prime candidates to be found unenforceable.

Is there any case law along those lines?

Re:Enforcable?

[Solandri]

One side doesn't decide it. One side insists on it, and the other side has to agree to it if they want what the first side is selling (satellite TV service in this case).

Your bank robber analogy doesn't work because the robber is forcing the bank to hand over its money. In the case of satellite TV service, you are willingly giving AT&T money in exchange for a service you want. Just like you have the right not to buy from them if you don't like their terms, they have the right to refuse to sell to you if they don't like your terms.*

Arbitration clauses are a result of (ironically) jury trials in civil courts awarding huge damages for trivial or stupid reasons. Since jurors are selected at random from the entire population, you cannot be sure if you're going to get competent or incompetent jurors. Lawyers exploit this by dismissing potential jurors who might actually understand the technical minutia of a civil case (I've been dismissed every time after I say I have an engineering degree from MIT). Companies responded to this uncertainty by requiring arbitration - where they know cases will be decided by competent arbitrators. (Arbiters work for an independent company - they're not employees of the company selling you the product/service as you seem to think.)

* The Supreme Court cases allowing arbitration were based on satellite TV and cellular phone service - both of which are national and thus have competition. I suspect the arbitration clauses in cable TV and landline phone service would be found illegal, because those are government-granted monopolies. The buyer doesn't have a choice in those cases - if you want cable TV, the government forces you to buy it from that one cable TV company. If the cable company insists on arbitration, that becomes more like your bank robber analogy.

Fix the damned court system...

[bradley13]

I'm sure that arbitration can be abused. However, until the US fixes its damned court system, companies have no choice but to insist on this.

Personal example: I used to run a small company that produced a niche ERP system. Our Swiss attorney told us: Whatever you do, never sell to a customer in the US." We made one exception. We sold the system to a small organization that was just determined it was what they needed. A few months later, for reasons we were not privy to, the company fired someone who was a major user of the system. So she goes to a lawyer, to sue us, because she lost her job. I mean, really, WTF?

The tort system is a lottery, and both lawyers and plaintiffs use it as one - hoping to strike it rich off the back of someone else. The lawyers are the ones to tell their clients "no, you don't have a case, go get a life". A lawyer who takes a frivolous case to court should be fined, and required to personally pay the other side's legal expenses.

Re:forced arbitration for consumers..

[guises]

Unfortunately, it's not politicians allowing this to happen. It's the Supreme court. Here, this is the most relevant decision. Though there are a set of decisions related to that.

... Is what I was going to say. Actually, I'm reading a little more on this and apparently it goes back to the Federal Arbitration Act of 1925, which allows for contractually-based forced arbitration. The recent rulings seem to be about extending this to class-action lawsuits. i.e.: AT&T is using the arbitration clause to not only force individuals into arbitration, but to preclude any class-action suits against them. Someone will hopefully correct me if I'm reading that wrong.

So I guess we could blame present day politicians for failing to get rid of a century-old law, but that seems kind of arbitrary. Maybe we should just point out that this law is a harmful one, and ask that it be removed without placing blame.