Arbitration –The Consumer Rights Kryptonite

Have you ever been excited to buy a new car or go on a shopping spree with the new credit card you just received in the mail?  Of course you have- that was a rhetorical question.  What is not exciting is when some unforeseen circumstance causes you financial hardship.  Maybe you lost your job or had a serious medical injury.  Either way, you are strapped for cash and can no longer pay for that new car or the credit card bill due at the end of the month.  Inevitably, once you miss your first payment, you can bet the collection calls will begin.  If you read one of my previous blogs, you will know exactly what to do and what to tell these creditors (basically, stop calling) when they call.  However, more times than not, these creditors will continue to call because most consumers are unaware of protective collection statutes that exist in the state of Florida.  That is a topic for another time though.  The real issue is this- you have told these creditors to stop calling, and thus, most likely have a cause of action against them.  Here is where it gets tricky.  Almost every creditor contract (car loan, credit card, etc.) has what is called an arbitration clause.  What is an arbitration clause and how does it affect my rights?

Arbitration Clauses

An arbitration clause is a clause in a contract that in short says, “you the consumer agree to not sue the creditor in state or federal court for any issue that arises as a result of the instant contract.”  Instead, you the consumer agree to file a demand for arbitration.  That doesn’t seem too bad, right?  Wrong!  Arbitration clauses are pro-corporation/big business.  Many of the arbitrators who hear these cases come from a defense attorney (creditor attorney) background and are not pro-consumer.  The converse of this is that in state and federal court, juries tend to be pro-consumer and anti-big corporation/creditor.  This is typically where you see your big verdicts against corporations because juries are common folk who like to stick it to these large companies. Thus, you can see the importance of being able to litigate your case in state and federal court versus in arbitration.

What can I do to avoid Arbitration?

Most arbitration clauses are bulletproof.  It is very difficult to successfully challenge them in court.  With that said, there are a couple ways to avoid arbitration and to litigate your case in state or federal court.  The first way is to opt out of the arbitration clause once you sign a contract with a creditor.  Normally, you have thirty (30) days from the time you sign the contract to opt out of arbitration.  This is very impractical though because most consumers do not foresee suing the creditor they just entered into a contract with.  The second way is to file your case in small claims court.  Almost all arbitration clauses contain a small claims exception, which allows consumers to proceed in small claims court.  The catch with this is that if your case is worth more than $5,000, you cannot file in small claims court because it exceeds the jurisdictional limit.

What To Do

If you think you have a case against a creditor, you should contact a consumer protection attorney.  For what it is worth, many consumer protection attorneys in the St. Petersburg, Florida area have not arbitrated a case through a final hearing- I have.  Thus, I have the necessary experience to push your case to the very end and maximize the value of your case. If you think you have a case, call me at 727-344-0123, or e-mail me at and tell me what has happened.    

no-cost consultation: (727) 344-0123