Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Consumer groups see call for ban on forced arbitration clauses, (Jul 14, 2016)

By Carrie DeLeon,TRDaily

Consumer protection agencies across the country are calling for a ban on forced arbitration clauses in consumer contracts, according to a report released on July 13 by the Consumer Federation of America (CFA) and the North American Consumer Protection Investigators (NACPI) discussing the top consumer complaints of 2015.

"These clauses prevent consumers from taking legal action to enforce their rights and change company behavior," the CFA said. "Studies have shown that consumers do not fare as well in private arbitration hearings as they do in court, and the outcomes of those types of proceedings have no legal effect on companies’ future behavior. Several federal agencies, including the Consumer Financial Protection Bureau, are considering restricting these clauses. An overarching law banning these clauses for all consumer contracts would ensure that people have the access to justice to which they are entitled," the report states.

Susan Grant, director of consumer protection and privacy at CFA, said that a ban on forced arbitration clauses in consumer contracts was the most recommended new law by the state and local consumer protection agencies responding to the group’s survey. The agencies also suggested that stricter laws against caller ID spoofing and robocalls are necessary to better protect consumers.

Also according to the survey, service problems or billing disputes with phone, cable, satellite, Internet, and other utility services came in at number three on the top-10 list of consumer complaints received in 2015.

Ms. Grant said that complaints about utilities rose in 2015 from previous years, largely due to the competitive electricity and gas market which has been known to conduct some "unsavory" sales tactics.

In addition, do-not call violations and disputes about cellphone sales were listed among the fastest-growing complaints to state and local consumer protection agencies. According to the report, the fastest growing category of complaints last year to the Los Angeles County Department of Consumer and Business Affairs was about cellphone billing issues. According to the report, "many consumers don’t seem to understand the costs of their plans, and the salespeople at third-party retailers sometimes don’t provide adequate information about the plans."

Robocalls that do not involve problems with sales of goods or services are also being seen as an increasing problem. The Florida Department of Agriculture and Consumer Services said that often times the incentive for the callers, regardless of what they are offering, is to collect a "dip fee," or "a fraction of a cent that they get from the telephone companies for completing calls to landline telephone customers who have caller ID services."

"Those fractions add up, so some telemarketers blast out billions of calls across the country without regard to whether they are annoying consumers, violating their no-call rights, or ultimately selling them anything," according to the report.

The CFA said that 33 state and local agencies from a total of 20 states responded to the survey. The report also discussed FTC consumer protection enforcement efforts.

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