8/20/2012 2:15 PM ET|
Arbitrate your life away
But the fact that the National Arbitration Forum could do business at all shouldn't give anyone comfort -- least of all the companies that argue that arbitration is just as good as going to court, only faster and cheaper.
It's the "cheaper" part companies really like, since they don't have to deal with pesky class-action lawsuits that cost them money and (often) force them to clean up their acts when they're treating consumers unfairly. Companies warn that the end of mandatory arbitration would result in higher prices for consumers. Give up your rights so you can save a few pennies, in other words.
If binding arbitration is really a better option -- cheaper, faster and just as fair -- then companies should let it compete in a free marketplace. Let us choose whether to have disputes resolved that way, rather than forcing it on us as our only option. That's the way binding arbitration used to work, before companies figured out they could strong-arm us into signing our rights away.
One way to curb corporate power would be to have Congress step up -- OK, OK, you can stop laughing now. Big Money has such a stranglehold on our lawmakers that only public opinion -- a big, roaring mass of public opinion -- can force Congress to defy its corporate funders. We haven't got that at the moment, again because most people don't realize what they've lost.
Another possible solution lies in the newborn Consumer Financial Protection Bureau. The Dodd-Frank financial reform act requires the bureau to study mandatory-arbitration clauses, and the bureau has the rule-making ability to limit or even abolish the clauses in consumer contracts.
No wonder the big banks have opposed the agency. It's our best hope of getting back our power of choice. Keep your fingers crossed.
Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.
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