Arbitration agreements or clauses have long been included in many types of consumer contracts. From purchasing electronics, to getting a new credit card, arbitration clauses are certainly a way that large companies have tried to prevent legal action from consumers. Most people don’t read the fine print on a contract; after all, there is so much to read. The various clauses that make up the contract are usually located on the back of the document or otherwise in small print that makes it difficult to read.
Effect of Arbitration Clauses
When arbitration clauses are utilized they are designed to be of help to the contract provider. They are usually a way to prohibit the consumer from being able to take legal action, even when it is necessary. The clauses force customers into arbitration when there are problems with the contract, rather than taking the matter to court. Further, arbitration clauses act to discourage action from being taken at all, and when arbitration is used, it is often required that they use specific arbitration services.
New Rules May Help Consumers
Consumers are hoping that a new proposed rule regarding arbitration will be put into place. The new rules would essentially restore the consumer’s right to sue banks, and likely other institutions, rather than being forced into arbitration. The new rule may allow people to finally be able to come together again in class action lawsuits against banks and others.
Class Action Lawsuits
Arbitration clauses are often established, in part, to discourage consumers from being able to take legal action, outside of the rules of the contract. In many cases, consumers dropped their cases rather than go through a mandatory arbitration with a specific arbitrator. Class action lawsuits are a way that consumers can compel companies to take a more fair approach to their business practices. By limiting this ability, companies have more control over legal actions against them.
The U.S. legal system is intended to help all citizens seek justice. Arbitration bypasses the court system and makes consumers go through other methods to resolve their problems, in effect taking away their basic constitutional rights. The proposed legislation could finally allow consumers to legally address their concerns. Although still in the first stages, the proposed rule could certainly be a step in the right direction. Consumers will eventually be better able to legally resolve problems, such as those encountered in nursing homes. The result will be that the customers will be better able to force companies to do the right thing and to act in accordance with the law.
While nursing homes are not included in the current proposal, the passage of this rule will pave the way for changes in all areas where arbitration clauses are utilized. Nursing home residents and their families may have an easier time seeking better conditions, improved services, and appropriate care after the rule is in place. If your loved one is the victim of nursing home abuse or neglect, contact the legal team at Levin & Perconti to learn your options.
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