Consumers are often victims of unfair practices of which they are previously unaware, and when they learn about subjects like arbitration clauses in contracts, it may be too late and the damage is done. Arbitration clauses buried in the fine print of consumer contracts limit a consumer’s access to the courts to individually sue or participate in a class action lawsuit against a creditor who wrongs them. In too many cases the companies suing consumers either sue the wrong person or do not have any real documentation that someone actually owes a debt. Binding arbitration clauses can prevent a wronged consumer from suing a bad-acting company in court. While it may seem like there is no hope, the Consumer Financial Protection Bureau (CFPB) can fine companies who break the law and consumer rights attorneys are advocating for consumers and fighting back.
By the time consumers find out they agreed to arbitration, it often too late to sue in court.
Arbitration is an alternative dispute resolution procedure in which a panel of arbitrators, often lawyers and retired judges, are presented with the arguments of both sides of a dispute. Based on the local rules for arbitration, where it takes place, the parties can state their claims, defenses, and present evidence supporting their claims. Arbitration however, is not the same as a court of law, and if the arbitration clause is a “binding,” the parties must accept the decision of the arbitrators and that is the end of the line, and there is no returning to the civil courts. To have a dispute settled in arbitration requires both the parties to voluntarily agree to arbitration. However, that agreement to be limited to arbitration is often included in the fine print of consumer agreements, and the consumers accepting those terms often have no idea that they are giving up their right to sue in traditional civil courts.
Arbitration clauses are found in more agreements than consumers may realize.
Arbitration clauses are frequently used in consumer contracts for utility services, credit cards and consumer loans for homes, businesses and automobiles. Even if a consumer is aware of arbitration and they seek to avoid being bound by a binding arbitration clause, the fine print in a disclosure that comes with the monthly bill is easily overlooked. Moreover, consumers transacting their business online might fail to read a click through agreement containing a modification to their agreement with the lender or provider in which they accept the new terms by clicking to proceed to make an online payment, for example.
To big to be held accountable? Suing consumers who do not even owe a debt? How is this possible?
The big companies who use arbitration clauses in their consumer agreements assume that the majority of consumers will ignore or not challenge the arbitration clause because they need the services or money borrowed from lenders. In the example of a utility company, there may be no other viable option for services and the consumer has little choice other than to accept the terms of the agreement, including the arbitration clause. In many cases, the consumer pays their bills on time and satisfies their duties in the agreement. However, in other cases, things go horribly wrong and the consumer suffers the harsh reality of the arbitration agreement, barring their access to the courts when they want to sue the lender or service provider.
One individual in Maryland, living on a fixed social security income, found out about arbitration clauses the hard way. Mr. Clifford Cain, Jr., a retired electrician in Baltimore[i], one day discovered his bank account was drained because a utility obtained a judgment against him and seized his funds. Incredibly, the debt was not a current and owing debt and the suit to collect was wholly improper. Even when Midland Funding, the party collecting against Mr. Cain, was unable to produce a copy of any arbitration agreement applying to Mr. Cain, the court allowed an example of another similar customer and their arbitration agreement, to satisfy the Court.
Abusive collectors and loan servicers have business models assuming many people cannot fight back.
Big companies buy and sell bundles of debt and collection companies seek to collect on what they assume are proper owing debts. In most cases, these collectors do not have any of the original documentation of an agreement, the individuals names just appear on a list with an amount owed. People who have never had any transactions with some companies are sued in court and judgments are entered against them. Individuals who want to challenge an arbitration clause that blocks them from court have an uphill battle. Class action lawsuits representing a significant number of consumers have a better chance of making it through litigation, and some cases return large jury verdicts against big companies engaged in deceptive and harmful debt collection practices.
The Courts too often take the position of the plaintiff companies and uphold the arbitration clauses.
Courts are often ruling that arbitration clauses are binding and enforceable, even despite clear and reasonable arguments about their enforceability, and are blocking class action lawsuits. Justice is failing. The CFPB that protects consumers from harmful business and debt collection practices. The CFPB can issue fines against companies bullying consumers, and the CFPB is not barred by any arbitration clause because the CFPB is not a court of law, rather an administrative agency with the teeth necessary to take a bite out of bad business practices.
Advocating for consumers is all the attorneys at the Zamparo Law Group do, and they do it well.
The attorneys at the Zamparo Law Group, advocating for consumers, file complaints with the CFPB and file individual and class action lawsuits against abusive companies, bullying consumers with arbitration clauses and bogus claims. Many people do not realize that there are consumer protection laws the Zamparo Law Group attorneys fight to be enforced. Unfortunately, too many people give up and accept an unfair fate, some eventually filing for bankruptcy protection to avoid the burden of being bullied by abusive companies. If you think you are a victim of unfair business practices and need someone advocating for you, call the Zamparo Law Group.
To learn more about consumer protection law and the Zamparo Law Group, please visit the firm’s website. You may also ask for a free case review. The Zamparo Law Group is connected on social media, please follow us and share our resources we share on our Facebook page. You may call the Zamparo Law Group with any questions by dialing (224) 875-3202.
[i] NYTimes, Sued Over Old Debt, and Blocked From Fighting Back, by Jessica Silver-Greenberg and Michael Corkery, Dec. 22, 2015.