Reality Check: Forced Arbitration Clauses - KCTV5

Reality Check: Forced Arbitration Clauses

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(FOX19) -

Imagine you've just stepped into the ring for a prizefight only to learn that the referee and the judges are employed by your opponent. "Forced Arbitration" is gaining in popularity among big name companies and it can force you into the same kind of one-sided fight.

What (if anything) consumers and employees can do about Forced Arbitration? 

Forced Arbitration Clauses are popping up everywhere these days. They can be found in contracts for cell phones, credit cards, e-coupons, bank accounts, gift cards, social media, and even employment contracts.

So what exactly is Forced Arbitration? Suppose you start a new job only to find yourself a victim of race, age, or sexual harassment? Or maybe you downloaded a company coupon to buy a product only the product was defective and your child was injured as a result. If somewhere in the fine print of the employment contract or that coupon is a forced arbitration clause, you are legally bound to settle your differences with the company privately.

FOX19 NOW Legal Analyst Mike Allen explains that the odds are heavily stacked in the company's favor in these clauses.

"They choose the arbitrators and an arbitration is supposed to be unbiased and fair but they're also human beings too and if they're being paid by the company, I think people get a pretty good idea of where their loyalties lie," says Allen.

In forced arbitration the decision is final, meaning there is no appeal option. If you're thinking that forced arbitration doesn't apply to you because you never sign anything, think again.

You don't have to sign on the bottom line to agree to the terms of forced arbitration, in fact, doing so is as easy as pointing and clicking on an online box.

When it comes to forced arbitration, the highest court in the land has ruled that ignorance is not a defense.

"The Supreme Court just recently ruled that these things are upheld even if the employee or consumer did not know it was in there ... The Supreme Court took a pretty tough stance...a little surprising to people," adds Allen.

In the Supreme Court Ruling American Express v. Italian Colors Restaurant, the high court ruled in favor of the forced arbitration clause and that's the bottom line here.

Unless the law changes, companies have the legal right to include forced arbitration clauses in their contracts and the only thing you can do to avoid them is not to do business with them. And that's a Reality Check.

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