Consumer Attorneys of California
Information Brief
Sharon J. Arkin, President

TO:      Members of the California State Legislature

FR:       Consumer Attorneys of California

DATE:   February 28, 2005

RE:       Arbitration Left ID Theft Victim With $27,000 Bill
 Washington PostFebruary 24, 2005

A recent story [February 24, 2005] in the Washington Post, “Arbitration Left ID Theft Victim with $27,000 Bill,” describes how an identity theft victim was victimized twice when she was forced to comply with a pre-dispute binding arbitration agreement.

“Beth Plowman, a Damascus international public health adviser, was shocked when she discovered that a $27,240 arbitration judgment had been levied against her for credit card charges incurred by an identity thief who bought sporting goods all across Europe.”

“…Plowman is an example of what can go wrong when mandatory arbitration clauses are written into credit card agreements.”

“…the arbitration process may saddle consumers with debts they may not have incurred, as well as substantial arbitration costs, including the credit card company's legal fees.”

“‘Before consumers know it, an arbitrator has issued an award against them, and the award can't be challenged on its merits’ but only on narrower grounds such as whether the arbitrator was impartial or exceeded his or her power, said Steve Tripoli, consumer advocate for National Consumer Law Center.”

“In the past decade, mandatory arbitration clauses have been appearing in the fine print of many consumer agreements, including those for credit cards, telephone service, car sales and even exterminator services. These clauses require consumers to agree in advance to waive their rights to a court hearing and refer all disputes to independent, third-party adjudicators.”

“…that the process itself often stacks the deck against the individual since the cases permit less evidence-gathering than in trials and can be appealed only on narrow grounds.”

“Plowman considers herself one of the luckier consumers….In August 2003, the arbitrator issued a $27,240 award against her.  She subsequently hired an attorney who helped convince the collection agency that the charges were not hers.  The agency dropped its claim, but only after Plowman paid $2,200 in legal fees.”

Consumers should not be forced into ANY pre-dispute agreement that mandates arbitration and waives their constitutional right to a jury trial.

This unequal balance of power places consumers on an uneven playing field.  In essence consumers, like Ms. Plowman, are being victimized by these entities that are using these “agreements” to erode the civil justice system.

For more information about protecting the public’s right to a jury trial, please contact the Consumer Attorneys of California state office at (916) 442-6902.