An illuminating (and alarming) report by Public Citizen and NACA, on the one year anniversary of Concepcion. The takeaway:
The Supreme Court’s holding in AT&T Mobility v. Concepcion has had far-reaching consequences for millions of consumers who are forced to sign away their rights to get a loan, a credit card, a cell phone, and other everyday consumer products and services. Under Concepcion, companies can insert in forced arbitration clauses provisions that block consumers from banding together to pursue their claims in collective or class actions.
Forced arbitration is bad enough on its own terms, as it offers a consumer wronged by corporate misconduct no avenue for relief except a private, secretive tribunal chosen by the company. For millions of consumers in countless instances of corporate wrongdoing, class action bans sweep away even that weak chance for justice. Many consumer claims aren’t feasible as individual actions, and therefore class action bans stop them from proceeding at all. In addition to leaving consumers without remedies for harms done to them, class action bans shield law-breaking companies from accountability. For the companies, this is precisely the point.
Potential solutions rest with Congress and certain federal agencies. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau can eliminate forced arbitration in consumer financial services contracts, and the Securities and Exchange Commission can do the same in investor contracts with brokerdealers and investment advisers. The Arbitration Fairness Act (AFA), now pending in Congress, would eliminate forced arbitration in consumer and non-union employment contracts.
Until regulatory agencies and Congress enact these fixes, millions of consumers will remain without a vital tool to protect their rights and hold wrongdoers accountable.