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Mandatory Binding Arbitration. A consumer scam.

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johncoby2 Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-16-07 01:15 PM
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Mandatory Binding Arbitration. A consumer scam.
Over the last decade the use of mandatory binding arbitration as an alternative to our civil court system has been growing, especially in consumer contracts. Last month, Comcast, notified its subscribers that they would be bound to arbitration unless they specifically opt out of the clause. Comcast subscribers should learn from home buyers about this scam, and accept this offer to opt-out immediately.

A civil trial is guaranteed by the 7th amendment of the Constitution. Unfortunately due to loopholes in federal law, mandatory, binding arbitration has been forced upon consumers to resolve a dispute. Most new homebuilders in Texas have an arbitration clause as a prerequisite to purchasing therefore waving their Constitutional rights. Comcast, as well as credit card companies, car dealers, insurance companies, and just about every industry have followed suit, to avoid suits.

Contrary to popular belief, arbitration is extremely costly and grossly unfair to the consumer. There has been enough abuse in arbitration that the Texas House and Senate have conducted three investigations into the practice. And the newly created Texas Residential Construction Commission, which oversees the homebuilding industry, has also conducted a very thorough study. At all the hearings, the consumers hammered the various industries with horror stories attributed to arbitration.

Over the years a number of unfair arbitration awards have been disclosed in the investigations. Even when the arbitration is in the favor of the consumer, the results can be devastating. A perfect example of the abusive nature of arbitration is an arbitration award against homebuilder Bob Perry made public in a Senate hearing.

The filing fee to initiate the arbitration process was over $6000. The fee to file in our civil court system is only $125. The cost for the arbitrator was $1000 a day. In court, the judge and jury are paid with our tax dollars. The filing fee did not include the cost of an attorney or expert witnesses. The arbitrator in this case ruled in favor of the homebuyer for a total of $750,000. This binding award was entered over three years ago, and as of today has not been paid by the builder.

This is just one of many examples detailing the abuse of arbitration, yet our State Legislature has done nothing to curb the abuse. Recently, on the federal level, Senator Feingold (D-WI) and Congressman Johnson (D-LA) have filed the Arbitration Fairness Act of 2007 which would declare mandatory, binding arbitration clauses unenforceable in consumer contracts, including homebuilding, employment, credit cards, and Comcast.

This will would preserve consumers rights to their Constitution, and allow the use of alternative dispute resolution processes like arbitration if and when there is a dispute. There is absolutely no reason to force arbitration on a consumer with a mandatory, binding, arbitration clause buried in the fine print of the contract, unless it is a scam. And mandatory binding arbitration clauses are just that.

Homebuilders and other industries have long defended the used of mandatory arbitration clauses, claiming arbitration is good for the consumer, but the evidence proves otherwise. The abuse of arbitration will stop only when it is truly an option, not a mandate, to our current court system. Until then consumers should carefully read their contracts and rethink their purchases if there is a mandatory, binding arbitration clause. In the case of Comcast, they should preserve their rights to their Constitution and opt out of the mandatory clause.
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jody Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-16-07 01:58 PM
Response to Original message
1. 
Edited on Thu Aug-16-07 02:09 PM by jody
Arbitration Agreement

Why You Shouldn't Buy a Vehicle From Any Seller That Requires a "Mandatory Binding Arbitration Agreement"
More and more automobile dealerships across the country are adding mandatory binding arbitration agreements, also called "dispute resolution mechanisms," to contracts for new and used vehicles as well as to financing contracts. By signing the contract, the consumer is agreeing to binding arbitration to settle any future dispute and also waiving the right to sue or appeal-even if the dealership committed fraud

Such Dealership Mandatory Arbitration Agreements are almost always designed to protect the seller and to make it nearly impossible for the consumer to receive a fair hearing-even when the fraud committed against the consumer is clear and highly destructive.

But dealers themselves don't think that mandatory binding arbitration is fair. Dealers lobbied for a federal law (passed in November 2002) to prevent automobile and truck manufacturers from requiring the use of mandatory binding arbitration to resolve franchise disputes with dealers.


ON EDIT ADD
Arbitration Fairness Act of 2007
S.1782

H.R.3010

Public Citizen Urges Support for the Arbitration Fairness Act of 2007

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johncoby2 Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-16-07 02:39 PM
Response to Reply #1
2. Oh. Now that is good!
I didnt know this.
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