Companies provide almost all consumer financial products and services under written contracts.  Arbitration agreements in those contracts can require that parties resolve any subsequent disputes through privately-appointed individuals (arbitrators), rather than through the court system.  

The right to trial by jury in any civil or criminal dispute is a protected right guaranteed to the population in the 7th Amendment right to trial by jury.    An ‘arbitration clause’ takes away that right to dispute a consumer issue in court.   Equifax announced the data security breach and then invited victims to sign up for free credit monitoring and identify theft services through its site.   Buried in the ‘terms of agreement or use’ clause of these programs was an arbitration clause that intended to prohibit victims using the services from being able to later sue Equifax for the breach.  

Equifax reacted to the publicity of anger over having this clause in their terms of use and publicly announced they would not be applying or enforcing arbitration clauses to prevent consumer claims in exchange for offering the identity theft protection in response to the cybersecurity incident or for claims related to the cybersecurity incident itself.   The full effects of the security breach upon the victims, as well as the effect of the arbitration provisions, may likely be seen for some time in the future.  

But the public shaming that Equifax received for using these clauses highlights the need for public awareness.   Arbitration clauses have become commonplace in the consumer industry, and can be found in many areas, including credit cards, checking accounts, and mobile wireless contracts.  Other industries have followed suit, including nursing homes and employment contracts.  Many people report they are unaware they have signed an arbitration clause to restrict their rights or do not fully understand the significance.   

Before ‘clicking’ on an electronic ‘terms of use’ or signing any contract, read it and understand your rights.  Do not voluntarily give up your constitutional right to a trial by jury in the event that a dispute arises in one of these areas.   To learn more about how arbitration clauses impact consumers, please visit https://www.consumerfinance.gov/data-research/research-reports/arbitration-study-report-to-congress-2015.  The West Virginia Association for Justice has prepared resources to advocate and inform consumers about the need for preserving their constitutional rights against mandatory binding arbitration clauses.  For more information, please visit: https://www.wvaj.org/index.cfm?pg=LegislativeHypocrisyonArbitration

If you have a dispute arising from a consumer product or service where the business is asserting that an ‘arbitration’ clause prevents you from seeking legal action, contact Tammy Bowles Raines Law Office for a free consultation.