Contract Clause You Want To Avoid

Tuesday, November 6th 2007, 2:07 pm
By: News On 6

If a company did you wrong, it's hard to imagine you would agree not to sue and then keep all the information secret and enter into a process where you stand a 94% chance of losing your case, but the truth is, we all sign dozens of documents that say just that. News On 6 crime reporter Lori Fullbright reports binding mandatory arbitration clauses can be found in our phone bills, credit card agreements, mortgages, insurance, and car contracts.

Their use has gotten so bad, Congress is thinking about making these clauses illegal.

Steve and Cindy Grogan bought a used Suburban three years ago from a Tulsa dealership. They say everything was fine, until they went to trade it in somewhere else on a different car.

"Came and said, ‘Steve, I can't take the Suburban. It's clean, taken care of,’ so I laughed and said why and he handed me a Carfax that said it's a lemon,” said Steve Grogan.

Grogan says the original dealer refused to make it right, so he wanted to take legal action. That's when he learned he signed an arbitration clause when he bought the SUV.

"Somebody just ripped us off. That's how we feel. They ripped us off and tried to make us like it,” added Steve Grogran, a frustrated car buyer.

Arbitration clauses say you can't take a company to court. You let a stranger decide your fate. One study of arbitrators in California says businesses won 94% of the time. Plus, if you lose, you can't appeal.

"The intent, if you read the law, was for business to business, to resolve disputes out of courts. It was never intended to apply to consumers. The process has been perverted and it's in almost every contract,” said Luke Wallace, a Tulsa attorney.

Dennis Hammons, a disabled Marine veteran who served all over the world, and his wife, Jennifer, went to another Tulsa dealership to trade in a car for a new Mustang. They learned a month later, their old car had never been paid off. That red-flagged their credit, they returned the new car and wanted their old car back, but never got it.

They also won't have their day in court, thanks to an arbitration clause.

"It makes it totally one-sided. Unfair against the consumer,” said Dennis Hammons, who signed an arbitration clause.

Businesses say arbitration is a faster, cheaper way of handling disputes. Ask companies up front if they have arbitration clauses in the fine print, and if so, shop elsewhere.

If you're signing documents and see the clause, cross it out. If the company objects, go somewhere else.

You can also call or write the folks from Oklahoma in Congress about Senate Bill 1782 and House Resolution 3010.

Arbitration can be a fair, efficient way to handle disputes if both sides voluntarily agree to it, but a lot of people don't know they're signing these clauses. And, they don't know they're giving up a constitutional right to have their day in court.

Watch the video: Consumers Warned About Arbitration Clauses

WEB EXTRA: Luke Wallace's Comments On Arbitration Contracts

For more information on the "Arbitration Fairness Act of 2007," click here.

To read the article, "How Arbitration Steals Your Day In Court," click here.