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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.
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?
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.
Enjoy life! This is not a dress rehearsal.
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.