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AT&T Advertising Businesses Democrats Government The Almighty Buck The Courts United States Technology

AT&T Uses Forced Arbitration To Overcharge Customers, Senators Say (arstechnica.com) 165

Posted by BeauHD from the read-the-fine-print dept.
An anonymous reader quotes a report from Ars Technica: Five Democratic US senators allege that AT&T's use of forced arbitration clauses has helped the company charge higher prices than the ones it advertises to customers. The senators pointed to a CBS News investigation that described "more than 4,000 complaints against AT&T and [subsidiary] DirecTV related to deals, promotions and overcharging in the past two years." But customers have little recourse because they are forced to settle disputes with AT&T in arbitration, according to Sen. Al Franken (D-Minn.), Richard Blumenthal (D-Conn.), Ron Wyden (D-Ore.), Patrick Leahy (D-Vt.), and Edward Markey (D-Mass.). "Forced arbitration provisions in telecommunications contracts erode Americans' ability to seek justice in the courts by forcing them into a privatized system that is inherently biased in favor of providers and which offers virtually no way to challenge a biased outcome," the senators wrote in a letter yesterday to AT&T CEO Randall Stephenson. "Forced arbitration requires consumers to sign away their constitutional right to hold providers accountable in court just to access modern-day essentials like mobile phone, Internet, and pay-TV services." Forced arbitration provisions such as AT&T's also "include a class action waiver; language which strips consumers of the right to band together with other consumers to challenge a provider's widespread wrongdoing," they wrote.
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AT&T Uses Forced Arbitration To Overcharge Customers, Senators Say More

AT&T Uses Forced Arbitration To Overcharge Customers, Senators Say

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  • forced arbitration for consumers.. (Score:5, Insightful)

    by gl4ss ( 559668 ) on Friday June 09, 2017 @09:01AM (#54584277) Homepage Journal

    ..is stupid to allow.

    anyone knows that. only americans don't.

    • The americans who are allowing this to happen (politicians) have to be getting something out of it. The rest of us have little opportunity to avoid it.

      • Re: (Score:2)

        by Calydor ( 739835 )

        Well, at least it sounds like those politicians are starting to have had enough and are pushing back. MAYBE they were simply ridiculously naive and thought the providers were going to be honest and honorable in arbitration, because that has ever happened before.

        • Politicians are much smarter than they let on. They make a deal to let a big corporation take advantage of the voters, then tell the voters the corp was sneaky and underhanded. Only when the voters start revolting do they push the corps back into line.

      • Re: (Score:2)

        by Agripa ( 139780 )

        The americans who are allowing this to happen (politicians) have to be getting something out of it. The rest of us have little opportunity to avoid it.

        The politicians are fishing for more bribes from AT&T.

      • Re:forced arbitration for consumers.. (Score:4, Interesting)

        by guises ( 2423402 ) on Saturday June 10, 2017 @07:45AM (#54590845)
        Unfortunately, it's not politicians allowing this to happen. It's the Supreme court. Here [supremecourt.gov], this is the most relevant decision. Though there are a set of decisions related to that.

        ... Is what I was going to say. Actually, I'm reading a little more on this and apparently it goes back to the Federal Arbitration Act of 1925, which allows for contractually-based forced arbitration. The recent rulings seem to be about extending this to class-action lawsuits. i.e.: AT&T is using the arbitration clause to not only force individuals into arbitration, but to preclude any class-action suits against them. Someone will hopefully correct me if I'm reading that wrong.

        So I guess we could blame present day politicians for failing to get rid of a century-old law, but that seems kind of arbitrary. Maybe we should just point out that this law is a harmful one, and ask that it be removed without placing blame.

        • Unfortunately, it's not politicians allowing this to happen. It's the Supreme court.

          Judge is a political position. They are nominated, elected or selected, and rule on matters of political import. And we've all heard of activist judges. The fact that they have enough decisions to make of political import that we can claim their job is amounting to activism proves their political impact.

    • Re:forced arbitration for consumers.. (Score:5, Insightful)

      by TheGratefulNet ( 143330 ) on Friday June 09, 2017 @10:06AM (#54584671)

      a republican concept; deny regular people any rights, keep them in fear of big corps and slowly erode what little rights they have left.

      BIG BUSINESS is all that matters to them.

      and they forget that the other half of the population is NOT in the business ownership 'club' and does not benefit from the 'give the ruling class everything they ask for, and more shit.

      did you notice only D's were fighting this?

      no, both sides are not equally bad. not by a long shot.

      • Re: (Score:2, Insightful)

        by GameboyRMH ( 1153867 )

        and they forget that the other half of the population is NOT in the business ownership 'club' and does not benefit from the 'give the ruling class everything they ask for, and more shit.

        Oh they didn't forget, they either believe in magical trickle-down nonsense, or they just don't care.

      • Re:forced arbitration for consumers.. (Score:4, Informative)

        by Solandri ( 704621 ) on Friday June 09, 2017 @12:01PM (#54585491)
        It's not a Republican concept. It's a freedom concept. People are free to make their own decisions.

        Every purchase is a sale. Every sale is a purchase. Economic transactions are symmetric that way. You are exchanging money for satellite TV service. DirecTV is exchanging satellite TV service for money. They are free to set the terms under which they'll agree to pay you (with service). You are free to set the terms under which you'll agree to pay them (with money). If both of you can come to equitable terms, then the trade happens. If you can't agree, then no trade happens.

        If you don't like the arbitration clause, it's real simple - don't agree to it. Tell them you won't be buying their service because they insist on arbitration, and walk away. Find someone selling a similar product who doesn't require arbitration. If every seller requires arbitration, then perhaps you should investigate why they're all requiring arbitration, instead of immediately making the knee-jerk reaction of prohibiting it because you don't like it. If "half of the population in the business ownership 'club'" is requiring arbitration, there's probably a good reason for it.

        Only Democrats were fighting this because taking away people's freedom under the guise of "the government knows better" is an anathema to Republican principles. Republicans believe in letting people make their own decisions, so the bad ideas die (because fewer people agree to them) while the better ideas flourish. They don't even claim to know which are the bad or good ideas - they just believe in your right to discover them for yourself.

        Remember, this isn't a court which concluded that AT&T used arbitration to overcharge customers. This is a group of Senators claiming it. (I'd actually agree with them when it comes to cable and Internet service. Those are frequently government-granted monopolies in this country so you don't have the ability to walk away from deals you don't like - there are no other sellers because the government has prohibited them. But satellite TV and mobile phone services have competitors you can go to if you don't like the terms offered.) The one area I'd agree with them is that DirecTV's advertising is deceptive. Those $50/mo offers are introductory prices, and after the first year the price jumps up to the regular price which is buried in the fine print and difficult to find. My cable company OTOH advertised the regular price directly underneath the introductory price - in a smaller non-bold font, but very easy to see so I knew quickly and exactly what I was getting into. But that falls under the jurisdiction of the FTC, not class action lawsuits.

        • I live in a state, the state has an established way to settle disputed when neither side agree.

          It makes as much sense to be able to sign that away as it does to sign away government involvement in the event I murder someone.

        • Re: (Score:2)

          by sjames ( 1099 )

          So you're saying we are perfectly free to huddle in a shack with no electricity, no telecommunication, no gas, no water, etc if we don't like the nearly ubiquitous clauses limiting recourse to the courts?

          Actually, we're not, the shack would be condemned as uninhabitable without at least power and water.

          • So you're saying we are perfectly free to huddle in a shack with no electricity, no telecommunication, no gas, no water, etc if we don't like the nearly ubiquitous clauses limiting recourse to the courts?

            Actually, we're not, the shack would be condemned as uninhabitable without at least power and water.

            Since you think saying no to DirectTV is equivalent to huddling in a shack without electricity, water, gas, or basic essentials...

            Yes, you SHOULD huddling in a shack without those things for a while to get your priorities in order.

            • Re: (Score:2)

              by sjames ( 1099 )

              You think the more important utilities aren't using arbitration clauses?

              Of course, internet service is becoming increasingly important if you want to find a decent job.

        • Re: (Score:2)

          by gl4ss ( 559668 )

          hmm wait, slavery is now a freedom concept?

          look, one of the keys to making freedom stay is simple, you don't allow people to sign out of the freedom.

          look - if you allow arbitration for consumer issues then you might just as well cancel all consumer protection laws while you're at it.

          so again, allowing companies to ask you to sign for arbitration is stupid. everyone knows that the end result is consumers getting screwed over.

          They are free to set the terms under which they'll agree to pay you (with service). You are free to set the terms under which you'll agree to pay them (with money). If both of you can come to equitable terms, then the trade happens. If you can't agree, then no trade happens.

          in case you didn't quite follow it, allowing arbitration allows the company to chang

    • Was just going to say this. How did this 1800s-ish idea manage to be born into and survive in the modern world? We know that company stores and debtors' prisons are bad ideas, yet many countries are OK with forced arbitration.

    • ..is stupid to allow.

      anyone knows that. only americans don't.

      Most civilized jurisdictions have provisions that don't allow onerous provisions in contracts of adhesion (basically, contracts where it's just take-it-or-leave-it, no possibility to negotiate terms that are one-sided in favour of the provider). Even without such provisions, such contracts are a clear violation of public policy. Except, I guess, in oligarchies like the USA of Today, where, not matter who you vote for, you lose, business wins.

    • Yes. That. Forced arbitration is bad.

      Surely in the 21st century, a modern company like AT&T can find better ways to screw their customers without the need of forced arbitration.
    • America: governed by the rich, for the rich.

  • Enforcable? (Score:5, Interesting)

    by McGregorMortis ( 536146 ) on Friday June 09, 2017 @09:04AM (#54584293)

    There are many common contract clauses that courts have found to be unenforceable. Arbitration-only and class-action-blocking clauses both seem like prime candidates to be found unenforceable.

    Is there any case law along those lines?

    • Re: Enforcable? (Score:1)

      by Anonymous Coward

      Yes and the case law is in favor of the compelled arbitration clauses.

      • Right. And it will continue to be that way unless a consumer protection law is passed about this specifically. Otherwise, this is a contract - and people are allowed to sign away lots of rights in a contract - even in a unilateral one.

    • No clue about federal laws but some states have laws that guarantee a persons right to a court in both civil and criminal matters. These type contracts are not used in those states.

      • Re: (Score:1)

        by Anonymous Coward

        No clue about federal laws but some states have laws that guarantee a persons right to a court in both civil and criminal matters. These type contracts are not used in those states.

        Federal law supersedes state laws. Federal law FAVORS arbitration. So that doesn't actually work.

        See, for example Ruszala v. Brookdale Living, 1 A.3d 806, 415 N.J. Super. 272 (Super. Ct. App. Div. 2010) (where the NJ legislature tried to limit forced arbitration in nursing home contracts via state law, and the New Jersey Appellate Division, a state court, held the New Jersey violated the Federal Arbitration Act).

      • California lost that argument in the Supreme Court (DirecTV vs. Imburgia - 2015).

      • Re:Enforcable? (Score:5, Insightful)

        by orlanz ( 882574 ) on Friday June 09, 2017 @10:04AM (#54584653)

        There was a 2015 Supreme Court ruling* that specifically addressed this, with arbitration, involved DirectTV, and a DirectTV clause that said "except where overruled by State". They ruled that Federal Law overruled California's** AND thus the exception clause in DirectTV's contract!!!

        When it comes to Telecoms it's been extremely rare in the past 30 years that the politicians don't favor big business. Telecoms hate state by state regulations... unless it protects them against competition.

        We had a very brief stint with Mr Wheeler as FCC chair. But something he swam upstream for years against a Republican majority is being washed away in mere months under Ajit. With Republicans owning the government there is no chance the arbitration issues will get corrected. They are also working on gutting the Consumer Financial Protection Bureau which is the only other organization that can address the issues via the unfair consumer contracts angle. I guess consumer contracts will get far worse in the next 4-6 years before the pendulum swings back and gets to partially fix it.

        * = http://www.latimes.com/busines... [latimes.com]
        ** = States rights... I only need them for stuff my party doesn't like!

        • I had not heard that but would assume that it would really depend on the state and the wording of the law as a well worded state law would be done in a manner that complies with the federal laws. Things like a minimum wage are easy the federal government says shall not be less than and the states says shall not be less than a higher number.

           

    • The Supreme Court ruled 6-3 in 2015 (DirecTV vs. Imburgia) that arbitration clauses in consumer contracts were binding, even above state law go the contrary.

    • Arbitration-only and class-action-blocking clauses both seem like prime candidates to be found unenforceable.

      Is there any case law along those lines?

      Yes, the U.S. Supreme Court has explicitly held that arbitration clauses in the main are enforceable (ironically enough, in a case against AT&T Mobility [google.com])

      That said, there are specific provisions of arbitration clauses that can be held unconscionable and thus unenforceable (e.g., allocating costs in a way that will effectively prevent the little guy from seeking arbitration at all), along the same theories long used in general contract law as you mention.

  • But it saves money! (Score:2, Insightful)

    by Anonymous Coward

    Arbitration panels are always filled with industry insiders. They are always unfair. (The financial services industry does the same thing. )

    They claim it's for the "good of the consumer" but as we see, whenever an industry says that, it is never the case.

    And too many folks have drank the "government regulations are bad" Kool-Aid and we are going end up with even less protections when the Republicans get done. The pendulum is swinging way too far to the right.

    No, this IS a partisan issue. The Republicans onl

    • If suing the provider is against the contract, it's time we start suing arbitration companies for their corruption

  • Ditched em years ago. Shop around and don't be too shy to haggle in person in store. It works.

  • Their logo is the Death Star. What do you expect? (Score:5, Funny)

    by enjar ( 249223 ) on Friday June 09, 2017 @09:22AM (#54584409) Homepage
    They alter the deal all the time, and you pray they don't alter it further.

  • Who knew arbitration would be exploited? Everyone. (Score:3)

    by sinij ( 911942 ) on Friday June 09, 2017 @09:38AM (#54584487)
    I am shocked, shocked to hear that corporations abuse arbitration clauses to profiteer and engage in dishonest billing practices.

  • Fix the damned court system... (Score:5, Interesting)

    by bradley13 ( 1118935 ) on Friday June 09, 2017 @09:44AM (#54584509) Homepage

    I'm sure that arbitration can be abused. However, until the US fixes its damned court system, companies have no choice but to insist on this.

    Personal example: I used to run a small company that produced a niche ERP system. Our Swiss attorney told us: Whatever you do, never sell to a customer in the US." We made one exception. We sold the system to a small organization that was just determined it was what they needed. A few months later, for reasons we were not privy to, the company fired someone who was a major user of the system. So she goes to a lawyer, to sue us, because she lost her job. I mean, really, WTF?

    The tort system is a lottery, and both lawyers and plaintiffs use it as one - hoping to strike it rich off the back of someone else. The lawyers are the ones to tell their clients "no, you don't have a case, go get a life". A lawyer who takes a frivolous case to court should be fined, and required to personally pay the other side's legal expenses.

    • Re: (Score:2)

      by thaylin ( 555395 )

      Forced arbitration would not have helped you there because your contract was with the company not the lady...

      In addition in cases of frivolous cases the party does have to pay legal expenses of the other side.

      • Re: (Score:2)

        by Luthair ( 847766 )
        My understanding is its pretty rare for defendants to be awarded court costs. Probably particularly true when the accuser is an individual and the defendant is a company.

    • So she goes to a lawyer, to sue us, because she lost her job. I mean, really, WTF?

      That's not a broken system. That's a permissive system. A broken system would be if she won.

      • Did the Bradley13 get compensated for defending against this unfair and frivolous law suite? If not it is a broken system.

        Did the lawyer or the plaintiff have any risk at all they might lose something, anything? If they did not have any such risk, it is a broken system

        All of us who could have benefited by competition if Bradley13 was competing in the market. He was scared away. We ALL lost.

        • Did the Bradley13 get compensated for defending against this unfair and frivolous law suite? If not it is a broken system.

          I don't know, ask him. Many court systems around the world allow you to get sued for anything and all expenses get covered by the loser.

          Even if he wasn't that's hardly a case for denying people the right to sue. Any way you cut it forced arbitration is a sidestepping of legal principles and companies sure as hell do not have "no choice" in the matter, especially given that despite America's stupid reputation for suing everything that moves the odds of it happening are still minute enough for it to simply be

  • You cannot sign away your Constitutional rights, you still have the right to sue you are just agreeing to where it will decided. However welcome to the fight for tort reform.
  • On paper, arbitration is far more efficient and cost effective than court action, and I for one am for it. The problem appears to be the bias involved. If the arbitrator is a neutral third party, who is familiar with the case law/issues, then it would be far more cost and time effective, and provide fair outcomes.

    • Re: (Score:2)

      by thaylin ( 555395 )

      The problem is how do you get a buisness to fix their abusive practices if you cannot group together. Grouping together for 1 case is more cost effective for both parties then not, but the business does not want to fix abusive practices that would be brought to light by group arbitration so they ban it.

    • Re: (Score:3)

      by sjames ( 1099 )

      Well, there's the problem. The arbitrator needs to get paid. Inevitably, he is dealing with 2 parties. One that will likely never need arbitration services again and another that could just about fill his calendar single handed, if they like the results.

  • Forced arbitration requires consumers to sign away their constitutional right to hold providers accountable in court just to access modern-day essentials like mobile phone, Internet, and pay-TV services.

    If it's a constitutional right, then wouldn't it be illegal for AT&T to ask clients to sign it away? Why would that even hold in court?

    "You signed a paper saying you are not human, therefore the court does not recognize you as a human being anymore." is as stupid as this thing.

    • Re: (Score:2)

      by thaylin ( 555395 )

      No. You cannot have your rights taken from you, but you CAN give them away if you so desire, but it only affects that agreement. So your analogy would be more like:

      "You signed a paper saying you are not human, therefore the COMPANY does not recognize you as a human being anymore.". The court and other companies would still be required to recognize you as a human, but you agreed not to be in regards to the first company.

      • You cannot have your rights taken from you, but you CAN give them away if you so desire.

        That's insane that this is even allowed. In which hypothetical cases would something like this be useful? If it's a right then a company should not be able to take it away from you.

        • Re: (Score:2)

          by thaylin ( 555395 )

          Again they did not take them, you gave them up "freely", just like you give up your right to privacy when you use ios or andriod, or any modern free cloud offering.

      • Re: (Score:2)

        by Calydor ( 739835 )

        So you signed away that you're a human being, and the case goes to arbitration with a company-owned arbitrator who would then, seeing as you are no longer recognized as a human being by them, be allowed to do whatever he wants to you, including but not limited to torture and murder?

      • You cannot even give them away, for example you cannot sign a piece of paper saying that you can now be treated like a pre-US civil war black slave and ignore those amendments.
        The state under certain circumstances can take those rights away, for instance locking you in jail and after being released preventing you from hanging out with other known criminals.
        You can choice to not use those rights, for instance not exercising your right to bear arms.
        So in the case of arbitration, you still have the right, h

    • Re: (Score:2)

      by 3247 ( 161794 )

      If it's a constitutional right, then wouldn't it be illegal for AT&T to ask clients to sign it away?

      Owning property is a constitutional right. Even though, you can sign it away (that's called "selling").

  • Should be a chocie (Score:3)

    by gurps_npc ( 621217 ) on Friday June 09, 2017 @10:02AM (#54584639) Homepage

    Contracts should NOT be allowed to block both personal court cases and class actions.

    I.E. If you require arbitration, then you must allow class actions. If you block class actions, then you can not require arbitration.

    Also, all arbitrators should be required to participate in some kind of YELP like ranking system, allowing the suer to have SOME idea of how the arbitrator works, because the contract writer surely did research on them before they picked them.

  • Isn't CBS News the news company that ran with the story that George W. Bush went AWOL from his Air National Guard unit based on documents which could not have been written less than 10 years after they purported to have been written? (rhetorical question)

    The news article quoted in the summary found over 4,000 COMPLAINTS that AT&T had used arbitration to overcharge. It does not tell us how many of those complaints it actually verified. The only evidence they offered that arbitration is biased is that o

    • Re: (Score:2)

      by thaylin ( 555395 )

      What do they have to do with anything? there are 4000 complains of overcharging STOP. That is a lot for any company, even one ATTs size.

      They do not say that it is biased because 18 people used it, I am not sure how you are reading that. They are claiming it is biased because it is stacked with industry insiders. But lets look at the statistics, in employment cases arbitration favors the business pretty much 80% of the time, in trail the employee wins ~70% of the time, that is almost completely opposite. In

  • I do not respect the authority of no-lawsuit clauses for essential services.

    Solved. This is a non-story

    Please provide reference to a SCOTUS ruling which affirm arbitration agreements in this circumstance and I'll shut up. P.S. now SCOTUS is hearing whether employer-mandated non-class-action clauses are enforceable: http://www.insurancejournal.co... [insurancejournal.com]

  • >> (the day after Comey's testimony) Five Democratic US senators talked about (something other than Trump)

    Just to be clear...we're done with the "impeach Trump" bit then?

  • Is that so hard to understand? Or do you just hope everything will work out so all those bad contracts won't ever come into play?

    When I was an independent software programmer, I'd get all sorts of boilerplate (and totally bogus) contracts from firms who wanted me to do a job for them. You know, "Everything you do and will ever do will belong to us; you can never do anything like this ever again; and we'll own everything you have if you make the slightest objection." I'd drag out ye olde red pencil, slash

    • Re: (Score:2)

      by sjames ( 1099 )

      Go look up the term "contract of adhesion". Then consider that the competition will shove similar contracts under your nose.

      Then you will understand why the situation bears no resemblance to anything you posted.

    • We're talking about monopoly or near-monopoly services. What would happen if there was one company that wanted your services, and they would only sign the contract they made for you, without changing a single word? How about if there were four, all of which insisted on their own unaltered contracts?

  • I don't understand. Why do you have a constitution that can be signed away?

    • Re: (Score:2)

      by thaylin ( 555395 )

      It cant be.. You have a fundamental misunderstanding of the constitution. The constitution regulates ONLY the government, not businesses. you cannot sign away your constitutional rights, but you can sign away your legal rights to a Business.

      • So you can still have the government sue at&t for ripping off consumers?

        Either you can or you can't seek governmental justice for business affairs. It would seem, to me, that seeking justice from the courts would be a constitutional right. I would have expected that there would be nothing that you could do or could sign that would limit your right to do so.

        Of course, it's not my constitution -- something that I'm thankful I've been able to say repeatedly all year.

        • Re: (Score:2)

          by thaylin ( 555395 )

          You cannot, as a private citizen sue the company, but if you can convince the state AG to go after themt hat would work, but that is VERY hard to do, especially in GOP states where the businesses seem to do no wrong.

  • and yet we have a major ideology saying that government is bad if it tries to stop big business abuse, and if you disagree, you're a "liberal".

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