A friend of mine signed up with a background check service for his small company. They had a "free trial" period where you could do a back ground check for only $1 without any other commitment. He went for that offer, but to access the report was an additional $1.99. He reluctantly paid that only to discover that there wasn't a lot of information contained in the report he paid for, but if he'd shell out a few more bucks they'd tell him more information.
This is from a company which enjoys a good reputation, but appears to be a scam. My friend was pissed and called me thinking that this would be a great class action lawsuit case. I agreed, but we had to look up the terms of service for the website he went on. It turns out that they have an arbitration clause which means that you aren't allowed to sue them in court, but instead have to take them to arbitration.
This means that there can't be a class action lawsuit. That ends any chance of a class action lawsuit. And since his damages are limited to just a few bucks, it's not worth it to hire an attorney and bring a case on his own.
Beyond that, in arbitration the rules of evidence don't apply. It's basically up to each arbitrator to set their own standard as to what evidence to allow and what not to allow. If you don't like the result, there is no appeals process.
This is all thanks to a backwards US Supreme Court decision in 2011. If your cell phone company adds illegal charges, you probably can't sue because of an arbitration clause. Same if your bank charges illegal fees.
It's being used by doctors, builders and other businesses too. Usually the customer doesn't even know that they are agreeing to it because it's in the fine print. In one survey only 7% of people knew that they had given away their usual rights to sue.
The counter is that people don't get anything from class action lawsuits, but the lawyers get rich. Sometimes that's true. But the truth is that a company doesn't have an incentive to stop acting bad unless they risk a big class lawsuit which could punish them.
So the end result is that the little guy is getting screwed over. And for whatever reason, lawmakers will add restrictions that make it harder to sue, but rarely will they make it easier. So people like my friend will continue to get taken advantage of.
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