When the credit reporting agency Equifax revealed recently that the personal information of 143 million Americans had been exposed due to its failure to adequately protect data like Social Security numbers, credit card accounts and birth dates, people were horrified. That reaction was compounded when the company offered one year of “free” credit monitoring to consumers — but only if they waived their right to sue Equifax in class-action suits, and instead agreed to arbitration. It’s a process that’s known as forced arbitration. Wells Fargo is another financial institution that has been criticized for its use of the practice.
David Seligman, attorney with the consumer group Towards Justice will be one of the panelists, told KGNU’s Robin Ryan about how prevalent the language has become in the agreements we make with businesses that range from cell phone companies to credit card vendors. He said that even though it impacts our everyday lives, it’s just under the surface nature keeps us from seeing how much damage such practices have the potential to do.
“By insulating themselves from private lawsuits and class actions to enforce the law, companies like these will be able to go on breaking the law.”
Over the summer, the Consumer Financial Protection Bureau established a rule to ban forced arbitration, but the House of Representatives repealed the rule within two weeks. Seligman says the policy remains in limbo until such time as the Senate weighs in. He says that while Wells Fargo and Equifax have paid sizeable penalties to federal agencies in order to settle claims of misconduct, he contends the fines remain insignificant enough in the eyes of corporations to be considered as a cost of doing business.
“What they know is public enforcers don’t have the resources to police every corner of the market place.”
Seligman was part of a group of panelists that discussed the dynamics of forced arbitration clauses that limit the legal power of consumers at the Bell Policy Center in Denver on Thursday September 28th at 1pm.