Unfortunately, the Supreme Court has taken another opportunity to expand the use of forced arbitration clauses in consumer contracts, denying us the right to negotiate such clauses out and take our claims to a jury. On the heels of the landmark ATT Mobility v. Concepcion decision, the Court held in CompuCredit v. Greenwood, that companies that promise to repair an individual’s credit can force customers into arbitration, instead of to a judge or jury trial, under the Federal Arbitration Act (FAA), even though the 1996 the Credit Repair Organizations Act gives consumers “the right to sue,” because the latter act doesn’t explicitly overrule the FAA. The impact of this decision extends the scope of the FAA and represents another in a string of decisions approving of forced arbitration clauses in consumer contracts.
A 1965 Supreme Court decision included a powerful summary of the detriments of arbitration: “Arbitration differs from judicial proceedings in many ways: arbitration carries no right to a jury trial as guaranteed by the Seventh Amendment; arbitrators need not be instructed in the law; they are not bound by rules of evidence; they need not give reasons for their awards; witnesses need not be sworn; the record of proceedings need not be complete; and judicial review, it has been held, is extremely limited.”
Forced arbitration clauses are never negotiable by the consumer, and the proceedings are heavily biased towards the business. The FAA might now be the most powerful anti-jury trial federal law on the books, with consumers trapped.