Public Citizen, along with 30 national and civil rights and citizen groups, issued the letter demanding the seven CEOs stop forced arbitration after The New York Times reported the experiences of customers and employees.
“CEOs of American Express, General Electric, JPMorgan Chase, Sears, Citigroup, Toyota and Discover Financial Services [should] stop putting forced arbitration clauses in their contracts because the practice is unfair and abusive,” Public Citizen stated.
The three-part report described how the seven companies have disabled consumer challenges to practices like predatory lending, wage theft and discrimination.
According to Public Citizen, the seven corporations played an early role in promoting what has become a “proliferation of forced arbitration clauses” in consumer and employment contracts.
“As public awareness of the abusive nature of forced arbitration grows, and as greater numbers of Americans encounter these forced arbitration clauses, the call to fix this problem will increasingly be recognized as a compelling call to justice,” the letter noted.
The letter is also being sent as US lawmakers who are debating legislation that could potentially block future laws from banning the use of forced arbitration clauses in contracts pertaining to loans, credit cards and other consumer financial services agreements, Public Citizen added.
Forced arbitration clauses deny American consumers and workers of the right to hold corporations accountable.
Instead of going to court, these clauses force consumer claims into private arbitration that favors the corporation.
Corporations write the arbitration rules, even choosing the arbitration firm and the location for the proceeding.
Forced arbitration is thus a parallel system of dispute resolution created by and for corporations and explicitly designed to protect their interests above all else.
Often, consumers are unaware that the contracts they sign subject them to arbitration. Even if they were aware, they would face the difficult choice of foregoing necessary products or services, and even potential employment, to preserve fundamental rights.
The corporations that were sent letters were named in a series of articles recently published by The New York Times.
The series highlighted the experiences of customers, small business owners, workers, students and ordinary American families with forced arbitration and showcased how the corporate practice severely impeded individuals’ access to justice.
The companies played an early role in promoting what has become a proliferation of forced arbitration clauses in consumer and employment contracts.
“As public awareness of the abusive nature of forced arbitration grows, and as greater numbers of Americans encounter these forced arbitration clauses, the call to fix this problem will increasingly be recognized as a compelling call to justice,” the letter said.
Particularly harmful are forced arbitration clauses that prevent individuals from joining their claims together to seek accountability for wrongful corporate actions that cause widespread or systemic harm.
“[A]rbitration, as an alternative way to resolve disputes outside the court system, can only be fair if meaningfully chosen by both parties after disputes arise,” the letter says.
The letter is being sent against the backdrop of an effort, spurred by Wall Street, to add a provision to the appropriations bill Congress is now finalizing, that would block the Consumer Financial Protection Bureau from moving forward with an announced rulemaking to curb the use of forced arbitration clauses in consumer loans, credit cards and other consumer financial services agreements.