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The Dangers of Binding, Forced Arbitration

Kevin Faulk Jan. 30, 2015

Are You Signing Your Life Away?

Businesses have grown more and more aggressive about including sneaky and dangerous clauses in the fine print of contracts. Some of these examples border on the ludicrous, such as this hotel in England that attempted to fine customers for leaving bad reviews on the internet: Trip Advisor couple ‘fined’ £100 by hotel for bad review.” I’m really not sure if that is more or less crazy than the parents who tried to charge a child for not coming to their son’s birthday party.

However, the biggest surprise that is found in contracts these days is binding, forced arbitration. In almost every contract for purchase of a vehicle in California, you will find a binding, forced arbitration clause. This means that the car dealership can prevent you from taking your case to a judge or a jury. Instead, they get to select an arbitration company, who they pay, to decide your case. Whom do you think the arbitration company is likely to choose?

This 20-minute video explains the dangers of binding, forced arbitration:

So, what can you do? Look for the arbitration clause in any contract you sign. Ask if you can strike it out. If they say no, then write down on the contract that the clause was non-negotiable. This won’t always help you, but it can open the door to an argument that you were forced to agree to it, and that can, in the right court, get you out of arbitration.

These clauses are a real danger to your chances of ever recovering a dime if something goes wrong with your new vehicle or if the car dealer has lied to you about the vehicle. Be vigilant. Be ready to stand up for yourself.