For years, big corporations have been sneakily writing themselves out of the court system, adding clauses into contracts that limit consumers to private, individual arbitration in the event of a dispute against a company. The newest movement in “mandatory arbitration clauses” being used in consumer contracts by big corporations, such as cellular companies, auto dealers, and even health care providers, forces consumers to waive their right to pursue these giant corporations should they be injured. Better yet, the steadily growing trend being used by these companies is pushing consumer rights out of the picture altogether.
The AT&T Mobility v. Concepcion case from 2011 was a turning point for consumer class action lawsuits, and upended years of California law that protected consumers from company arbitration clauses. The lawsuit, which originated in 2006 against mega-corporation AT&T, involved a San Diego couple that had signed a two-year cellular contract with the company, and in return were given a “free” phone. However, the couple was later charged a fee of $30.22, which AT&T claimed was sales tax for the phone. The case was challenged all the way to the Supreme Court, where the court ultimately ruled in AT&T’s favor due to an arbitration clause in the contract between the plaintiffs and AT&T that waived a consumer’s right to sue.
The ruling is detrimental to consumer rights in California and across the nation. By backing AT&T, the Court is supporting that it is acceptable for companies to add private arbitration clauses in their contracts, forcing consumers to give up their rights to class action lawsuits should companies legitimately wrong them. In truth, companies use these “mandatory” clauses to provide security from legal backlash so they can make frivolous charges on unsuspecting consumers. The charges are often times fairly small in amount; an arbitration clause can be successfully challenged if the company bills, say, thousands of dollars in unnecessary charges to a consumer. However, over time, the small charges against individual consumers add up to a substantial amount of profit for the company.
“You don’t even need to know the facts of the case to know that if it’s a case of a corporation versus consumer rights, the corporation wins. This is not a Court of judges, they are Republican, corporatist politicians in black robes,” said Mike Papantonio, host of Ring of Fire.
Public concern has been growing over the tendency for companies to prefer arbitration clauses to court proceedings, and with the Concepcion verdict, the future for consumer rights against big corporations is looking dim. Deepak Gupta, an attorney who represented the plaintiffs of the Concepcion case, expressed his concern over the ruling, and stressed that companies are most certainly taking away consumer rights, without the consumers even having knowledge that their rights are being forfeited to begin with.
“It’s earth-shattering. It takes away your right to hold companies accountable for transactions that we all engage in every day,” said Gupta to the Voice of San Diego. “We all assume that we have a right to hold a company accountable if they’re cheating us. We assume the consumer protection laws will apply. What’s frustrating is the average person doesn’t know that when they take out a contract … they’ve given away their rights.”
With the Supreme Court basically backing big companies, consumers may have to start facing the fact that consumer rights to class action lawsuits may soon be a thing of the past.
Krysta Loera is a writer and researcher with Ring of Fire. Follow her on Twitter @KrystaLoera