I recently wrote about one of the many dangers credit card holders face: mandatory arbitration. Most cardholders don't realize it, but they've agreed to have all disputes settled by arbitration firms that tend to favor the card-issuing banks. 

It turns out this problem is more far-reaching than I'd realized. It crops up in cell-phone contracts and even employment contracts. But then I heard more.

For example, the housing industry. If you buy a home from a builder, chances are you sign a lengthy contract with lots of fine print. There's also a good chance that you're agreeing to mandatory arbitration in case of disputes. On the Milwaukee Journal Sentinel's website, Ellen Gabler recently wrote about the Metropolitan Builders Association:

The group arbitrates disputes between its members and consumers who build a new home or have work done on their existing home. If there is a problem, the builder and homeowner go before an arbitration board run by the builders association. The interesting thing is that the people deciding the case are all members of the association.

Imagine that — you'd be taking up your beef about a builder to a group of people who are builders or associated with builders. It's not exactly a jury of your peers, is it? That's worth thinking about, because many people who support arbitration explain that it's faster and cheaper than going to court. That may be true, but it sure seems less fair than the court system.

Making matters worse is that most people don't realize they're agreeing to it, as the provision is typically buried deep in a contract. Companies that use arbitration clauses include national homebuilders like Toll Brothers (NYSE: TOL), Beazer Homes (NYSE: BZH), and Lennar (NYSE: LEN).

So what's the good news in all this? There has been agitation in Washington to ban mandatory arbitration clauses. The best outcome would be for Congress to improve the current situation. You may want to let your representatives know your thoughts on the matter.

But until then, be aware of what you sign — and think twice if you see mandatory arbitration clauses in contracts.



We're here to help!

We live by our creed of "helping those who need it most" and have helped thousands of clients get the justice they desperately needed and deserved. If you feel you have a case or just have questions please contact us for a free consultation. There is no risk and no fees unless we win for you.

Fields marked    may be required for submission.
  1. I'm an attorney

Data Breach

FCC looking to limit mandatory arbitration agreements...

Today the Federal Communications Commission (FCC) said it has started working on rules that would limit...

'Tort reform' harms us all

A column penned by Josh Moon and published in the Montgomery Advertiser on July 3 points out how recent...

Hot Coffee documentary explores issues of tort reform

An original documentary film, Hot Coffee, recently premiered on HBO. The film takes its name from the...

Hot Coffee documentary exposes who really gets burned...

Last night an original documentary film called Hot Coffee debuted on HBO. The film takes its name from...

NAF enters into consent decree with Minnesota AG...

Last week, we told you about a lawsuit filed by Minnesota's attorney general against the nation's...

Minnesota AG files consumer fraud lawsuit against...

On July 14, 2009, Minnesota Attorney General Lori Swanson filed a lawsuit against the National...

Lawyers and staff continue to help me

I suffered from an allergic reaction to a common medication causing permanent injury when I was 15 years old. My settlement allows me to take care of myself instead of being on disability. Even after my case was over, the lawyers and staff continue to help me.

—Tamika