A Rigged System

Forced arbitration clauses are buried in the fine print of bank account and credit card agreements, employment applications, college enrollment forms, nursing home admission documents and nearly every other transaction Americans encounter every day.  Forced arbitration slams the courthouse doors shut on consumers, employees, and students when they are cheated, harassed, and discriminated against by corporations. Instead of being able to hold the corporation accountable in court, you’ll be forced into arbitration – a rigged system where the corporation gets to pick the arbitrator and you can get stuck paying the fees. There’s almost no chance of appeal, the process is completely secret, and your right to justice is denied.

But there’s a way to fight back. The Consumer Financial Protection Bureau is considering a rule that would restore your rights if you have been injured because a financial institution has broken the law. The CFPB needs to hear from you that forced arbitration puts your financial security at risk. Please tell the CFPB to protect consumers who want to hold big corporations accountable and ban forced arbitration!

Here is a short film narrated by former Secretary of Labor Robert Reich that tells three stories of how forced arbitration denies justice for workers, students and small business owners.

The Problem

In March 2015, the CFPB released a comprehensive 728-page study on the use of forced arbitration in consumer financial products like checking accounts, payday loans, and credit cards. It found that these clauses are pervasive, affecting tens of millions of Americans across the country.

7%Consumers are blindsided by forced arbitration. According to the report, only 7 percent of consumers understood that forced arbitration clauses restricted their right to hold financial institutions accountable in court.

9%Forced arbitration is rigged against consumers. In 2010 and 2011, consumers with claims against financial institutions received relief in only 9 percent of arbitrations.

93%On the other hand, when corporations went after their customers, the corporation won in 93 percent of arbitrations.

80%Corporate America is a repeat player in forced arbitration. Corporate repeat players dominated arbitration filings in 2010 and 2011, constituting over 80 percent of filings.

12%The CFPB found that in arbitration, consumers won on average 12 percent of every dollar they claimed. This is in stark contrast to the arbitration awards for corporations, who won 98 percent of every dollar claimed.

The Solution

CFPB acts to restore consumers’ rights in contracts for financial services and products

Forced arbitration was among the leading consumer protection concerns for Congress when it created the Consumer Financial Protection Bureau. Congress empowered the Bureau to restrict or ban the use of forced arbitration in financial services or products as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Dodd-Frank required the CFPB to study the use of forced arbitration against consumers in disputes over financial services and products and to provide a report to Congress on its findings prior to issuing a rule. The study, released in March 2015, is both comprehensive and conclusive, and confirms that forced arbitration suppresses consumer claims and allows the financial services industry to completely evade the law.

“In a contest between just me – a restaurant in Oakland, California – and American Express, who do you think wins?”

Alan Carlson, owner of Italian Colors Restaurant in Oakland

A Timeline of Forced Arbitration


Forced arbitration clauses were virtually non-existent in consumer contracts. While arbitration had long been used to resolve disputes, it was voluntarily – and knowingly – entered into by both parties after the dispute arose.


Corporate executives from Bank of America, Chase, Citigroup, Discover, Sears, Toyota, and General Electric conspired to impose forced arbitration on consumers with the goal of “killing class actions and send plaintiffs’ lawyers to the ‘employment line.’” Within months, many of these companies adopted forced arbitration clauses in their contracts.


The forced arbitration conspiracy hits a road block when the California Supreme Court rules in favor of consumers in Discover Bank v. Superior Court, which held that forced arbitration clauses with class action waivers are unenforceable under California law where the plaintiff alleges that “the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money."


The Minnesota Attorney General brings an action against one of Wall Street’s favorite arbiters, the National Arbitration Forum, for consumer fraud, deceptive trade, and false statements in advertising. As a result, NAF agreed to stop accepting consumer debt collection cases.


The Dodd-Frank Wall Street Reform and Consumer Protection Act passes Congress and is signed by President Obama into law. The law instructs the Consumer Financial Protection Bureau to study the use of pre-dispute arbitration in consumer financial contracts and act in the public’s interest by restoring consumers' ability to choose how to resolve disputes.


In AT&T Mobility v. Concepcion, the U.S. Supreme Court ruled 5-4 that the Federal Arbitration Act (“FAA”) allows corporations to ban class actions and force consumers into a corporate-designed system of forced arbitration – even when an existing state law protects individuals from abusive forced arbitration clauses. The decision overturns the California Supreme Court decision in Discover Bank v. Superior Court.


In American Express Co. v. Italian Colors Restaurant, the U.S. Supreme Court ruled 5-3 that forced arbitration clauses are enforceable even when it can be proven that the clause makes it impossible for any consumers to assert their rights. Justice Elena Kagan described this effect in her dissent from a gleefully pro-corporate decision that further expanded forced arbitration: “The monopolist gets to use its monopoly power to insist on a contract effectively depriving its victims of all legal recourse. [The Court’s response to consumers is] Too darn bad.”


The CFPB releases its three-year, 728-page study on forced arbitration, which confirmed the devastating impact forced arbitration has had on the ability of Americans to hold financial institutions accountable for wrongdoing.


The CFPB proposes a rule that will open the courthouse doors to Americans who are victims of Wall Street wrongdoing.

More Stories of Forced Arbitration

Alan C.

Alan owns a small restaurant in Oakland, CA. He tried to hold American Express accountable in a class action lawsuit for antitrust violations for compelling merchants to accept Amex credit cards and pay exorbitant fees. His case made it all the way to the Supreme Court, but five conservative justices ruled that Amex’s fine print meant he couldn’t band together in a class action.

Dean C.

Dean suffered from dementia and was admitted to a nursing home near his home in Minnesota. But just two weeks later, he had lost 20 pounds and was severely dehydrated. He was rushed to a nearby hospital, but it was too late. When his family tried to hold the nursing home accountable, they were instead forced into arbitration, unable to find justice in a court of law.

Tia H.

Tia was training to become a manager at the now-defunct electronics store Circuit City when her boss began sexually harassing her with inappropriate comments and lewd behavior. Other managers did nothing, and when Tia filed a sexual harassment lawsuit, her case was thrown out of court because of a forced arbitration clause buried in her employment agreement.

“Legal fine print tips the scales against us. It is forcing consumers into private arbitration, denying us of our Constitutional right to protect ourselves in court.”

U.S. Senator Patrick Leahy

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