Citizens Against Lawsuit Abuse of Central Texas

Baltimore Sun
August 1, 2010

Lease a car, enroll in a cell phone plan or finance the purchase of a major appliance, and you're likely signing away your rights.

Most consumer contracts include clauses that require you to take any disputes with the auto dealership, phone company or retailer to an arbitrator — one chosen by the business. You can't take the business to court. You might not even be able to take part in a class action lawsuit with others who have similar complaints.

And the arbitrator's decision — with no explanation — is generally final.

Consumers often aren't aware of this because the clauses are buried in the fine print of contracts. And even those who know what to look for say it's almost impossible to avoid arbitration mandates when signing up for a product or service.

Chicago attorney David Leibowitz says he unsuccessfully tried to get out of an arbitration clause before signing a lease for a Toyota, a few months before the manufacturer's acceleration problems came to light.

"I was signing under protest," he says. "If I can't get it changed, I doubt any consumer could."

Maryland lawmakers considered — and failed this year — to pass legislation making arbitration more transparent, and problems with the process have caught the attention of federal officials, who are taking a hard look at making consumers agree in advance to arbitration and ways to give them a fairer shake.

The recently enacted Wall Street reform law requires that the new Bureau of Consumer Financial Protection study arbitration clauses on financial products or services, giving the agency the power to restrict or ban them if necessary to protect consumers.

Bills pending in Congress also seek to bar such clauses in consumer products and services as well as in nursing home contracts.

READ MORE: http://www.baltimoresun.com/business/money/bs-bz-ambrose-arbitration-20100801,0,6126119,full.story