The Equifax breach was one of the worst hacks in information and substance theft. Equifax tried to make amends by offering free credit protection to anyone affected. But there was a hidden catch in the fine print. If you signed up for the protection, you entered into an arbitration clause.
The uproar that resulted caused Equifax to remove the language from their agreement. They also tried to say that the clause only covered the protection service and not the breach. This was a good catch by the public. Many people don’t know what an arbitration clause is and why it is so damaging for consumers. Here’s a brief explanation.
An arbitration clause, means that you cannot sue the other party in court. Instead, if you have a dispute, you go through a process called arbitration. The company performing the arbitration helps the two sides come to an agreement and both parties are bound by the decision. No lawyers are involved.
However, there is clear evidence that these arbitration courts put consumers at a severe disadvantage. Only a tiny percentage of consumers, around 7%, actually come out ahead in an arbitration claim. Worse, the arbitrator is usually paid by the company being sued. This pushes arbiters into having a financial incentive to rule for the big companies rather than the consumer.
Plus, without any lawyers present, consumers are often lost at sea. The company, on the other hand, may have its own internal legal team to fight any arbitration claims on its payroll. They can do all the preparation in advance. People don’t usually have lawyers on retainer at all times.
Furthermore, people are often tricked into agreeing to enter into arbitration rather than fighting for their rights in a courtroom, where the consumer has a fighting chance with the help of a lawyer. It’s extremely likely that you have already entered into such an arbitration clause with a company somewhere. People are often surprised when they try to sue a company and realize that.
Businesses believe that arbitration is better overall because the process is much faster and less costly than fighting in court. They’ll even attempt to sell it as pro-consumer since consumers won’t have to hire a lawyer either. While it may be faster, it is not a fair process.
Arbitration courts are a way for companies to force their customers with legitimate grievances to accept legally binding decisions without legal protections.
These arbitration clauses are also spreading to prevent people from entering class-action suits, a type of suit by definition that most people don’t know they are a part of until they are notified.
If you believe you have been forced into an arbitration clause without your consent or you have a company trying to force you to enter into arbitration rather than suing, contact The Cochran Firm immediately.