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Arbitration rulings more often favor businesses

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You and the LawWhen you sign up for cell phone service, open a bank account, apply for a job or try to get a credit card, you may be signing away your legal rights if a dispute arises later. In the fine print of these sorts of contracts, there is often a provision that requires you to take your claim to arbitration.

Arbitration has the effect of a court ruling, but a paid arbitrator — not a judge or jury — decides your case. You are often limited in your right to get information you need to prove your claim, and you do not have the right to appeal your case to a court of law.

But in most cases the arbitrator rules in favor of the corporation being sued and against the individual who brings the complaint.

Concluding a claim using arbitration can be faster and less expensive than filing a lawsuit. But in most cases the arbitrator rules in favor of the corporation being sued and against the individual who brings the complaint.

A review of consumer arbitration claims handled over a five-year period by two of the nation’s largest arbitration firms found that only 6 percent of claims filed ended in a ruling in favor of the consumer. In 94 percent of the cases, the arbitrator ruled in favor of the employer or financial services corporation.

Arbitration can be an appropriate way to settle contractual disputes between two evenly matched
corporations. But for the individual consumer, workers and small businesses taking on giant corporations accused of wrongdoing, the outcome is rarely in their favor.

Some members of Congress want to change the law so that corporations cannot force you to agree to arbitration in order to buy a cell phone, get a credit card, accept a job or put your parent in a nursing home. The U.S. House of Representatives passed a bill in the fall of 2019, H.R. 1423, that would restore rights to millions of Americans forced to settle their legal disputes in a private arbitration system that rarely runs in their favor.

If it becomes law, H.R. 1423 will prohibit contract provisions that force individuals, workers and small businesses to arbitrate their legal claims in employment, consumer, antitrust or civil rights disputes.


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