Cindy Schnackel’s Horror Story

I personally attribute settling a construction defect case to getting OUT of arbitration. The arbitration clause was in a home warranty policy that the builder bought and that we received after closing. We found out in time that FHA and VA buyers do not have to arbitrate with home warranty co’s, (Title 24, of the Code of Fed. Regulations, Sec. 203.204(g) states court has to be an option too.) Based on early “offers,” if we’d had to arbitrate we could’ve gotten nothing, or maybe up to about half our damages. Instead, because we were able to hold onto our right to use the courts, we were able to settle for pretty much all of our damages and didn’t have to go to trial. The leverage that consumers have when they CAN sue is important, even if they don’t go to trial or even file a lawsuit.

Now, as a consumer advocate for the last several years, I see so many consumers getting shafted by arbitration clauses with no way out. If whole industries are going to use these clauses so widely that consumers have no realistic choice to refuse them and shop elsewhere, then the law needs to be fixed so the clauses aren’t enforceable. Consumers can’t rely on the courts to get them out of arbitration. Some courts enforce it, some are less likely to, but it costs a lot fo time and money to fight the arbitration clause, and then they have the original case left to handle even if they get out of arbitration. It uses up their resources to fight the real battle.

Also, arbitration run privately by industries is fraught with reports of bias, disregard for the law, expense, and of course the secrecy that hides these complaints in private records. Other consumers are not aware of these complaints and can’t avoid bad companies even though they’re doing their “homework” first.

I support the Arbitration Fairness Act.

~ by ebragg on September 24, 2008.