Senate Judiciary Committee to Hold Hearings on Mandatory Arbitration
By Mitchell S. Ostwald
In March, the Senate Judiciary Committee lead by Senator Russell Feingold (D-Wisconsin) will hold a hearing on the use of predispute binding arbitration clauses and further debate legislation offered in January that will prohibit their use in consumer credit contracts.
Senator Feingold offered this amendment to a senate bankruptcy reform bill that would have barred credit card companies from forcing customers to agree to arbitration before disputes arose. His amendment was withdrawn after Senator Charles Grassley (R-Iowa) promised to hold hearings on this issue.
The focus of this debate centers around arbitration provisions like those contained in American Express Companies credit contracts, which binds consumers to arbitration provisions once they make a purchase with an American Express credit card. Under its arbitration provisions, all claims will be submitted to arbitration at the election of either the company or the consumer, and the arbitration will proceed according to the code of the National Arbitration Forum, a private dispute resolution service provider. Senator Feingold has expressed concerns that the "credit card companies and consumer credit lenders are increasingly slamming the courthouse doors shut on consumers, often unbeknownst to them. This is grossly unjust. "
Whether this results in a curtailing of the binding arbitration process for the unsuspecting credit card holders has yet to be seen. However, it's welcome relief that the senators still consider a right to trial by jury an important part of American jurisprudence.
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