First one of the biggest hacks ever. Then a delay in revealing who was affected. Now consumers are infuriated about fine print that may bar lawsuits.
“After Equifax Inc. revealed that sensitive data on two of every five Americans was exposed in a cyberattack, thousands logged onto a company website to see if they were at risk. For many, the site didn’t work at first. But for those who got through, a nasty surprise was waiting.
“If your data had been stolen, Equifax offered a free year of credit monitoring known as “TrustedID Premier.” But some fine print may also mean that consumers who agree would be giving up the right to sue over many types of damages related to the massive penetration.”
In July, “the Consumer Financial Protection Bureau (CFPB) issued a rule prohibiting banks, credit-card companies, and other financial institutions from including mandatory arbitration clauses in new contracts. The CFPB claims to have struck a blow for consumer rights, but the truth is, this rule will be a boon to frivolous lawsuits—and a drag on our economy.
“Despite all this, the CFPB maintains that arbitration is too time-consuming, too expensive, and too tilted toward big companies, who pay for the process after all. It argues class-action lawsuits are the proper vehicle for consumer justice. So under this new rule, companies will be prohibited from including mandatory arbitration clauses in new contracts, which prevent consumers from filing class-action lawsuits. The rule also requires companies that maintain contracts with arbitration clauses to submit to the CFPB detailed information regarding claims, awards, and other related materials, according to Forbes.
Corporations are using mandatory arbitration to eviscerate consumers' legal rights. The latest example is Equifax. In response to a massive cyberattack, the company has created a website where consumers can find out whether their personal information -- social security numbers, birthdates, and driver’s license numbers -- has been exposed. There's one catch: to access the site consumers must sign away their right to take the company to court for any wrongdoing. Buried in the fine print is a provision that forces consumers into mandatory closed-door arbitration, and bars class action suits.
The arbitration process gives corporations the upper-hand in legal disputes by bypassing normal courts. These hidden provisions have been slipped into all sorts of contracts, from credit card forms to employment agreements.
Mandatory arbitration clauses are an abuse of corporate power. They must not be used to deny access to the courts.
By Polly Mosendz and Shahien Nasiripour
