This week, Sprint agreed to pay nearly $3 million in government fines after being caught by the Federal Trade Commission for cheating and deceiving people with low credit scores. As the FTC’s Bureau of Consumer Protection explained, “Sprint failed to give many consumers required information about why they were placed in a more costly program, and when they did, the notice often came too late for consumers to choose another mobile carrier.…. Companies must follow the law when it comes to the way they use consumer credit reports and scores.”
Yes they must, and it’s wonderful to see the FTC on the job. But when consumers are cheated because of illegal corporate practices, neither government regulators nor law enforcers (like attorneys general) can usually do much to recover compensation for the victims. As we noted pretty recently in a post about the VW emissions scandal, class actions are the only realistic way to do that. But since the Supreme Court let them, corporations have been inserting clauses into contracts that ban class actions and force individuals to resolve disputes in corporate-controlled, secretive arbitration systems. Forced arbitration is bad enough. But without being able to join with others in a class action lawsuit, most claims simply disappear, allowing corporate wrongdoers to completely escape any legal accountability.
The Consumer Financial Protection Bureau has taken the bold step of moving towards a rule to ban such clauses in consumer financial “contracts.” We hope they hurry because the damage caused by these clauses grows every day.
Today, the Center for Justice & Democracy released a new, updated fact sheet listing nearly 50 important cases that were dismissed because of forced arbitration clauses and class-action bans. These tossed cases were brought by customers ripped-off by automobile dealers, banks, credit card companies, phone companies, payday lenders and for-profit colleges (to name a few). They involve employees suffering from discrimination and wage and hour abuse. And we know there are many more cases out there.
Notably, three cases were brought by customers defrauded by Sprint and, like the rest, were thrown out of court, leaving cheated customers with nothing.
This blog originally appeared at ThePopTort.com on October 22, 2015. Reprinted with permission.