Today on the Leonard Lopate Show, Jessica Silver-Greenberg, author of the NYT trilogy against arbitration, gave a fantastic overview on the rise of consumer arbitration and its repercussions. Listen to it here.
Earlier this week, 18 United States Senators–including New Jersey Senator and local superhero Cory Booker–called upon the Consumer Financial Protection Bureau to regulate prepaid debit cards issued to released prisoners. These “prison release cards” often carry exorbitant fees and are all around exploitative.
Over 650,000 prisoners leave state and federal jails each year. The majority are booked and released shortly thereafter; most people released from jails are never convicted of any crime. These individuals constitute an involuntary pool of consumers with no choice or say in whether they have to use prepaid debit cards to access their own money. Giskan Solotaroff is working with lawyers around the country to litigate a class action in Oregon and an arbitration in Florida against two prison release card companies: EZ Card & Kiosk LLC, which issues the EZ Exit Card, and Numi Financial, which issues the Prestige Prepaid MasterCard.
Senator Booker’s letter is available here.
In case you missed it, the New York Times ran an excellent three part series on arbitration agreements and class action waivers. The series makes it clear that arbitration clauses deprive consumers and individuals of their day in court, whether it be because the individual case is not economically viable, or worse yet, because the arbitration process is rigged.
Hopefully, this marks the beginning of a broad public awareness of how corporations insulate themselves from liability by sneaking arbitration clauses into their Terms and Conditions. If this issue can remain in the public eye, change will follow.
Here are the links to the series:
By Oren Giskan, Esq.
The people have spoken and while they like Cheerios, they do not like mandatory arbitration. General Mills tried to impose mandatory arbitration on anyone who “liked” it on social media or downloaded a coupon for one of its products. Because General Mills had no direct dealings (or a contract) with consumers, it had to come up with a novel way to obtain consumers’ “consent” to arbitration.
It turns out consumers do not like mandatory arbitration and they protested. So General Mills did the right thing and abandoned its efforts to prohibit consumers from suing in court (and suing as a class). General Mills undoubtedly recognized that if consumers are given a choice, they will take their business elsewhere.
By Catherine Anderson, Esq.
On June 28, 2013, Courthouse News Service reported on our class action which had been filed against OneWest Bank, IndyMac, Financial Freedom Senior Funding and other defendants concerning the force placement of insurance (commonly referred to in the industry as “force placed insurance” or “lender placed insurance”) on homeowner’s mortgages for hazard or fire insurance.
As alleged in our complaint, lender placed insurance is often twice to ten times as expensive as voluntary homeowner’s insurance obtained in the open market and includes the cost of kickbacks and other improper commissions to the lender and/or insurer which get charged to the homeowner’s mortgage. Recently, our action has been divided into two potential class actions: One action involves the lender placed hazard insurance which has been charged to homeowners with standard Fannie Mae Freddie Mac uniform mortgages by OneWest Bank and IndyMac through the insurance company Assurant and its subsidiary, American Security Insurance Company. From October 2010 through June 2013, American Security Insurance Company issued 65,136 lender placed hazard insurance policies on real property serviced by OneWest and/or IndyMac. The second action involves lender placed hazard insurance which has been charged to homeowners with reverse mortgages by OneWest and Financial Freedom Senior Funding through the insurance company Balboa Insurance and also includes claims for violation of the California Financial Elder Abuse statute.
By Oren Giskan, Esq.
Have you been following the FINRA v Charles Schwab (“Schwab”) battle? Schwab is a stock brokerage that recently inserted a ban on class actions in its customer agreement. FINRA, the Financial Industry Regulatory Authority, Inc., who regulates brokerages such as Schwab didn’t like it so it sued Schwab.
The Hearing Panel, which is part of FINRA, sided with Schwab and upheld the ban on class actions. This means that Schwab customers cannot band together in a class action and seek redress for any unlawful or deceptive practices that Schwab may engage in. (Keep in mind that Schwab was caught once before and paid over $200 million to settle a class action lawsuit alleging it marketed risky securities as conservative investments.) In other words, Schwab customers must individually take on Schwab no matter how many Schwab customers are affected by the same practice.
By Oren Giskan, Esq.
As we know, most companies now force their customers and/or their employees to arbitration through mandatory arbitration provisions in their contracts, whether it be an employment contract or the tiny print on the back of an invoice.
Judicial Arbitration and Mediation Services, Inc. (or “JAMS”) is the largest private alternative dispute provider in the world and is often named in contracts as the tribunal where your claim must be heard rather than being permitted to file in court. According to proponents of mandatory arbitration, arbitration is far more efficient and less costly than litigating before a judge.
by Catherine Anderson, Esq.
From now until February 15, 2013, consumers may opt-out of the Arbitration Provision of the American Express credit card agreement. Consumers who opt-out of arbitration will be able to bring claims and disputes in court, on an individual or class basis, against American Express. Consumers who do not opt-out will lose valuable rights, such as “the right to litigate …claim[s] in court or have a jury trial on that claim” and “the right to participate in a representative capacity or as a member of any class pertaining to any claim.”
Why opt out of arbitration? Statistics from Public Citizen, a consumer advocacy group, show that the corporate clients, not consumers, are routinely the predominant winners in arbitration. Moreover, the class action device is one of the most important tools consumers have against large companies. While an individual consumer claim is often for a modest sum, when aggregated among similarly situated consumers, the amount in controversy sky rockets. The American Express Arbitration Provision eliminates the corporate risk of class action liability. By opting out of arbitration, consumers can preserve the vital class action device and their right to trial by jury.
By Oren Giskan
A good decision out of the Seventh Circuit, Butler v. Sears Roebuck Inc., 2012 U.S. App. LEXIS 23284 (7th Cir. November 13, 2012) makes quick work of two common arguments against class actions. The Butler case involves what plaintiff alleges is a mold problem in front loading washing machines sold by Sears.
First, defendants always argue against class certification. But Judge Posner doesn’t think this makes sense: