By Nicole Arbabzadeh
There are matters that complement the core ideology of all political parties so well that lawmakers across the political spectrum should be working hand-in-hand to achieve the policies. The Arbitration Fairness Act and the Court Legal Access and Student Support (CLASS) Act, which would restore public’s rights to hold wrongdoing corporations accountable in court, are examples of exactly the kind of legislation that should transcend the partisan divide. And yet, partisanship has been a continuous roadblock to their implementation.
So let’s start by reviewing forced arbitration clauses and their devastating consequences for the constituents of all party affiliations. If you’re asking yourself, “What’s forced arbitration?” you’re certainly not alone. According to a recent study conducted by the Consumer Financial Protection Bureau (CFPB), three-quarters of respondents who understood the meaning of forced arbitration did not know whether their credit card contract contained a forced arbitration clause and a mere 7 percent of respondents whose credit card agreements did contain forced arbitration clauses correctly understood that they could not sue in court. These are startling findings considering that the CFPB’s study also found that the vast majority of prepaid card companies, private student loan lenders, and cell phone providers, and the list goes on, include a forced arbitration clause in their terms. These clauses block consumers’ access to public court and force harmed consumers into inherently biased and secretive arbitration proceedings as a condition for obtaining services.
And financial services consumers aren’t the only targeted group – most ordinary Americans are affected by arbitration clauses, as they are often forced upon employees, small businesses, nursing home residents, and college students, to name just a few.
Now, you may be asking, can arbitration clauses really be that bad? Well, forced arbitration:
1. Robs Ordinary Americans of their Hard-Earned Cash
By Robert Craycraft
Asbestos was once used as a flame-retardant and for electrical insulation in buildings, ships and homes. Before it was discovered to cause cancer, millions of American workers and veterans handled and were otherwise exposed to deadly asbestos fibers.
An unknown amount of the hazardous material is still present in our communities. The Centers for Disease Control and Prevention report that roughly 3,000 people continue to die from mesothelioma and asbestosis every year; some experts estimate the death toll is as high as 10,000 annually when other types of asbestos-linked diseases and cancers are included.
In early February, the U.S. House of Representatives Judiciary Committee Subcommittee on Regulatory Reform, Commercial, and Antitrust Law held a hearing on H.R. 526, the Furthering Asbestos Claim Transparency Act (or FACT Act). Generally speaking, the more transparency the better. However, in this case, the asbestos industry is using the guise of “transparency” to push the FACT Act as a way to delay compensation to asbestos victims and their families. The bill would require the trusts that manage victim compensation to retroactively compile information on all claims they’ve paid and to require the trusts to answer any and all information requests by asbestos company defendants.
These paperwork requirements could have the effect of slowing or even stopping the important work of the trusts to compensate victims that have developed deadly diseases like mesothelioma due to exposure to asbestos. Rep. Hank Johnson (D-Ga.) called the FACT Act a “Trojan horse” which “guarantees that the insurance companies pay as little as possible.”
As a general rule, cost-benefit analyses are suspect.
Such analyses – which federal agencies perform to weigh the health and safety “benefits” of regulations (benefits like lower infant mortality rates and reliably safe and clean drinking water) against the “cost” of lost profits to Corporate America – result in a distorted model of a regulation’s impact. Invariably, the distortion creates a bias that exaggerates the regulation’s “cost,” largely because cost (measured in dollars and cents) is more easily quantified than benefits.
So one might think it’s a good thing that economists at the FDA have started factoring in pleasure – or, more specifically, its loss – when weighing the costs and benefits of new regulations. And one might think that a regulation that is expected to result in lower infant mortality rates, fewer cancer diagnoses, and longer, healthier lives for the American public to be a winner in terms of “pleasure,” right?
Unfortunately, one would be wrong.
Shockingly, the FDA’s cost-benefit analysis for a new tobacco regulation resulted in the rule’s projected health and safety benefits – fewer instances of heart and lung disease and fewer early deaths – being reduced by 70 percent due to the “loss in pleasure” smokers endure when trying to break their addiction.
As an ex-smoker myself (tobacco-free since 2008), I am well aware that the symptoms of nicotine withdrawal certainly constitute a “loss in pleasure.” But the notion that a smoker’s physical discomfort for a relatively brief period of time somehow trumps by 70 percent the health benefits of quitting (not to mention the increase in one’s disposable income and the gradual restoration of one’s senses of taste and smell) is utterly outrageous.