Cellphone and credit card applications typically contain an arbitration clause that keeps you from suing the phone carrier or bank if a dispute arises. Often, the bank gets to pick the arbitrator. The federal government is looking to see if arbitration clauses give companies too much power.
If you have applied for a checking account, cellphone, or credit card, you have probably signed away some of your rights.
You may not even be aware that you have. In many cases, consumers agree to an arbitration clause that forfeits their right to a jury trial or class-action lawsuit if something goes wrong.
That means that if your cellphone carrier overbills you, you can't take the company to court. If the credit card company isn't moving to resolve a dispute, a threat to sue probably won't get you anywhere. Instead, you've agreed to have your case heard before an arbitrator who will make a binding decision.
Is that a good thing?
Companies that use arbitration clauses claim that the process is fair, and that it is faster and less expensive than litigation. It's also quite popular.
Of the 265 types of checking accounts offered by the 10 biggest banks, all but 10 required accountholders to waive the right to a jury trial, according to a 2010 study by the Pew Safe Checking in the Electronic Age Project. For 189 of those accounts, they also had to agree to have the dispute settled before a private arbiter chosen by the bank.