“If arbitration were in any way beneficial to consumers, it could be made an option and consumers would choose it.”
Richard Alderman, Director, Consumer Law Center, University of Houston Law Center
The American consumer has been badly bamboozled by corporate America and their political friends. Most Americans think that Mandatory (Forced) Arbitration is an excellent method to settle disputes quickly and economically. Nothing could be farther from the truth. Corporate America has used Mandatory Arbitration to take unfair advantage of millions of consumers. You, the American consumer, should be angry about how both politicians and corporate America have stacked the deck against you. Did you realize that you sign agreements with Mandatory (Forced) Arbitration clauses for most major purchases? How about large banks and investments companies that include these clauses in your investment and retirement accounts to protect themselves if your pension disappears? How about home builders who can never be sued for shoddy construction? And foundation repair companies? Read about arbitration myths and the truth below.
Myth – Arbitration is Fair, there is no Conflict of Interest
Myth – The Reasoning for the Arbitrator’s Decision is Public Information
Myth – Arbitration is more Economical for Consumers
Myth – Arbitrators are like Judges and they have to Follow the Law
Myth – Critics of Mandatory (Forced) Arbitration want to Prohibit all Arbitration
Myth – Most Consumers favor Mandatory (Forced) Arbitration
Myth – Arbitrators are Neutral and strive for Fair Unbiased Decisions
Myth – You can Appeal a Decision made in Arbitration
Myth – If you buy a New Home in Texas with Shoddy Workmanship, you can Sue
the Builder
Myth – Arbitration is Fair, there is no Conflict of Interest
Arbitration companies are “for profit” companies. Their customers are big businesses and corporate America. In Mandatory (Forced) Arbitration your opponent, a big bank for example, selects the arbitration company. The big businesses will select the arbitration companies that rule in their favor most frequently. This is a blatant and obvious conflict of interest. There is nothing FAIR about this incestuous relationship between big business and arbitration companies.
Myth – The Reasoning for the Arbitrator’s Decision is Public Information
There is NO requirement for an arbitrator to publicly disclose the reasons for his or her decision. Losers are often left in the dark. This is also referred to as “tough luck.”
Myth – Arbitration is more Economical for Consumers
Arbitration can cost many thousands of dollars and be much more expensive than a lawsuit. Arbitration companies and big businesses can force individuals to travel thousands of miles – part of the process of bludgeoning the little guy with excessive expenses. And you, the little guy, can be assessed “Arbitration Expenses.” This is part of the abuse process to discourage the little guy from pursuing his claim. Did you read the story about the homeowners with a $22,650 dispute with a foundation repair company and was sent a bill for $63,670 in arbitration expenses? They were only required to pay 50% – you can read about it at “Death by Arbitration.”
And there is more bad news. The little guy (you) loses most of the time in Mandatory (Forced) Arbitration and when that happens there is a good chance you will have to pay the big company’s legal fees too.
Myth – Arbitrators are like Judges and they have to Follow the Law
Wrong. Arbitrators are NOT like judges. They are NOT required to follow the law. They are NOT required to have any legal training, only arbitration training.
Laws that are on the books to protect us, such as the Civil Rights Act or the Equal Pay Act, do not have to be adhered to, followed, or even considered during the arbitration decision making process.
Myth – Critics of Mandatory (Forced) Arbitration want to Prohibit all Arbitration
There are several consumer rights groups that oppose Mandatory (Forced) Arbitration. They do support Voluntary Arbitration. This is a basic freedom – the right to choose. At the present time most consumers are NOT informed of the past abuses of Mandatory (Forced) Arbitration. When consumers are informed of the biases of Mandatory (Forced) Arbitration they almost always choose not to participate. Remember, if you have recently purchased a new home or cell phone, opened a bank or investment account, you have probably signed a contract with a Mandatory (Forced) Arbitration clause.
Myth – Most Consumers favor Mandatory (Forced) Arbitration
Most American Consumers favor voluntary arbitration and being given the choice to arbitrate or to pursue an alternative route. Consumers do NOT expect to be FORCED (Mandatory Arbitration) into separate legal system with a history of abuses that has no judge, no jury, no appeal, and no public record.
Myth – Arbitrators are Neutral and strive for Fair Unbiased Decisions
Well, ask the 94% or 97% of American consumers who have LOST their case with an Arbitration Company. Do you think they will tell you the process was fair? Remember, big business selects the arbitration company that will decide your case. These arbitration companies are “for profit” companies and they are seeking repeat customers. Their repeat customers are the big businesses that you are arbitrating against. Big businesses select arbitration companies that rule in their favor – 94% or 97% of the time depending on which arbitration company or arbitrator you are studying. Sound fair to you?
Myth – You can Appeal a Decision made in Arbitration
There is no appeal in arbitration. You are bound by the decision. Again, NO appeal. How does that sound after reading all the other myths above?
Myth – If you buy a New Home in Texas with Shoddy Workmanship, you can Sue the Builder
Wrong. If you buy a new home from a builder in the state of Texas, you have signed a contract that Requires MANDATORY ARBITRATION. If the dirt under your concrete slab foundation was improperly compacted ( or not compacted at all ) and now your foundation (and home) has multiple cracks and damage, how are you going to find justice? Good luck because the Texas legislature and big home builders have created an environment where you can not sue them – you must SUBMIT to their Mandatory (Forced) Arbitration. How do you feel about buying a new home now?
Other Sources of Information about Mandatory (Forced) Arbitration
ABC News – Minnesota lawsuit claims credit card arbitration firm has ties to industry
Big Banks forced to Remove Mandatory Arbitration
Forbes.com – Credit Card Arbitration
Citizen.org – The Arbitration Trap (Study finds Consumers LOSE 94% of Arbitration cases)
Dawson Foundation Repair does NOT have any arbitration clause in its agreements with customers. We feel that arbitration clauses are UNFAIR and designed to protect corporations and businesses from shoddy work and shoddy services. Arbitration clauses, for-profit arbitration companies, and the arbitration process are designed to defeat the consumer – which happens more than 90% of the time.
Other arbitration related pages on the Dawson web site: