consumer arbitration Archives

DannLaw founder Marc Dann — Attorney Marc Dann

Spring is celebrated as a time for renewal. Here at DannLaw, we’re marking the beginning of the season by renewing our commitment to seeking and securing justice for consumers who have been ripped off by credit card companies, banks and retailers, homeowners abused by mortgage lenders and servicers, and victims of identity theft and other cybercrimes resulting from data breaches.

That commitment, along with our knowledge of the law, experience, expertise, and ability to develop and utilize highly effective, innovative legal strategies have made DannLaw a consumer protection powerhouse people trust to safeguard their families, their homes, and their family’s future.

Building upon that and assisting more clients than ever before are our primary goals for 2024. Here’s a look on how we plan to achieve them…

DannLaw’s Forced Arbitration Practice Group battles for consumers trapped in an unfair system

Fueled by a series of Supreme Court decisions handed down over the past 40 years, forced arbitration clauses have been adopted by tens of thousands of companies that provide a seemingly limitless array of goods and services.

This has not exactly been a positive development for consumers. Shennan Kavanagh, the director of litigation at the National Consumer Law Center (NCLC) explains why:

“Forced arbitration robs consumers of their basic Seventh Amendment right to access the courts. These fine print traps allow predatory lenders, fraudsters, unscrupulous banks, and other repeat offenders to escape accountability by depriving consumers of choice and forcing disputes into closed-door, biased proceedings where consumers rarely win.”

By the way, “rarely” is an understatement. According to NCLC attorney Lauren Saunders, consumers who take on companies alone lose 96% of the time.

To make matters worse, a recent study released by NCLC revealed that the vast majority of Americans have no idea what a forced arbitration clause is or does or that they unwittingly agreed to clauses buried in the fine print of contracts they clicked “yes” to online or physically signed.

That lack of knowledge can have an extremely high price tag, a fact that doesn’t hit consumers until they become embroiled in a dispute with a company and discover they have no path to justice or reasonable opportunity to recover what they are owed.

The inequities in the system cry out for reform. That is why DannLaw has joined the NCLC and other consumer advocates in calling on Congress and the Consumer Financial Protection Bureau (CFPB) to end the forced arbitration reign of terror. To date, both have refused to act.

In reaction to their inexcusable inaction, DannLaw has formed a Forced Arbitration Practice Group led by attorneys Alisa Adams and Kurt Jones who have extensive experience pursuing and winning forced arbitration claims. Alissa, Kurt, and the Group’s talented paralegals are ready, willing, and more than able to take on banks, financial services firms, and any company that is using forced arbitration to prey upon, rip off, or exploit their customers.

If you or someone you know is a victim of forced arbitration, click here to arrange a free consultation with our Forced Arbitration team.

We are also available to co-counsel with attorneys who now represent clients with forced arbitration claims. To learn more about collaborating with us or to refer a client to us, please click here.

The companies and industries that have been inducted into the DannLaw Forced Arbitration Hall of Shame are among the worst abusers of the process, but they are not alone. As we noted above, thousands of other providers of goods and services use it to exploit consumers. We are prepared to battle them all.

Consumer Class Action Cases

In addition to helping our clients win forced arbitration cases, DannLaw regularly files suit on behalf of individual and groups of consumers whose claims are not subject to the unfair process.

We are currently litigating a number of class action suits in courts across the nation, and we will continue to seek justice and just compensation via the courts when that is the appropriate course of action. Here is a brief overview of some of the most interesting and consequential cases we are currently pursuing:

Financial Services Wells Fargo

It should come as no surprise to anyone that we have once again filed class action suits against Wells Fargo. Despite having paid more than $27 billion in fines since 2000, Wells remains a serious serial abuser of its customers and other consumers. \The cases against Wells involve:

Mortgage Discrimination. We allege that during the time interest rates were low, Wells denied loans to applicants who were members of minority groups at a much higher rate than other lenders.

Adding services to customer accounts without authorization. We have filed a series of class action suits alleging that Wells made millions of dollars by adding services including credit protection, supplemental hospital insurance, life and disability Insurance and others to consumers’ accounts without authorization or permission. If you recently received a letter from Wells apologizing for this conduct, we would like to hear from you. Please click here to arrange a free consultation that will enable us to determine if you are entitled to financial compensation from the company.

Financial Services: Bank of America

We recently filed suit in North Carolina alleging that Bank of America opened unauthorized consumer accounts. If BOA opened an account in your name without your consent or permission, please click here to share your story with us. Like people who have been victimized by Wells, you may be eligible for financial compensation.

Retailers: Dollar General

Despite being exposed in media reports like this one featuring DannLaw founder Marc Dann, Dollar General continues to charge higher prices at the register than are posted on shelves. We are now pursuing cases in New York, New Jersey and Oklahoma, but believe the company is engaging in the practice in other states. If this has happened to you at Dollar General or another store click here to tell us your story

Retailers: Walmart

We are investigating reports that Walmart is treating customers who use two forms of payment unfairly when they are due a refund. If this has happened to you, please let us k now.

Data Breaches

Data breaches that enable cyberthieves to steal and misuse victims’ sensitive and confidential information is a growing problem in the U.S. That is why we are expanding our Data Privacy and Security Practice Group and working with the legal community to develop strategies that will ensure we can pursue and secure justice and just compensation for those put at risk when corporations, government agencies, and other entities fail to protect the personal data in their possession. As part of that effort, I am pleased to report that I was recently invited to serve on the prestigious Sedona Conference Data and Privacy Liability Working Group which is working to address challenging questions related to legal liability and damages.

You should be aware that health care companies and insurers have become a prime target for hackers and cyber criminals, a fact underscored by the class action suits we recently filed against Merch Health and Optimum Health.

If you have been or are ever notified that your personal data including but not limited to your driver’s license, social security, credit card and other account numbers, confidential health or medical records, or other identifying information has been hacked, stolen, or compromised, please contact our data privacy team. immediately so we can begin protecting you, your family, and your future. Do not delay, every moment your data is exposed increases the chances it will be misused.

Automobile and Motorcycle dealerships:

We regularly file class action suits against car, truck, and motorcycle dealers that add unauthorized products or services to vehicles, misrepresent the amount of the sale, and/or add hidden and opaque charges like “Documentary Fees” to sales agreements.

We have secured multiple multi-million-dollar awards for classes of auto purchasers and we will continue to actively and aggressively pursue claims on behalf of consumers who have been cheated or abused. If you are troubled or suspicious about something related to your vehcile purchase contact us today to arrange a no-cost, no-obligation consultation.

Foreclosure Defense and Mortgage Servicing Litigation Update

DannLaw began by representing borrowers and homeowners who were in or about to be in foreclosure. Today, after helping thousands of people save their homes and their financial futures, stopping foreclosures and negotiating loan modifications continue to be a primary focus of our practice—and needed as much as ever.

That is because Ohio and New Jersey lead the nation in foreclosures, due in part to a surge in attempts by debt buyers to collect “zombie mortgages”— debts that homeowners thought were forgiven or satisfied long ago but still exist.

The key to our ability to save a home is timing: the earlier we get involved, the more we can do to battle mortgage lenders and servicers who engage in unethical or illegal activities like dual tracking—promising to modify a loan while moving ahead with a foreclosure action.

If you are in or are facing the threat of foreclosure DannLaw will utilize the tested, highly effective legal strategy that has helped thousands of families just like yours.

First, our experienced foreclosure defense team will aggressively defend and foreclosure action that has been filed,

Second, we will identify, document, and pursue claims you may have against your mortgage servicer for dual tracking, misapplying payments, failing to pay taxes or insurances, and other abuses, and,

Third, the members of our talented mortgage modification team will use their expertise to work out an agreement with your mortgage company that will enable you to stay in your home.

Remember, time is of the essence. Every minute you wait brings you one step closer to losing your home, do don’t delay, click here to contact DannLaw’s Foreclosure Defense team today.

Thanks for taking the time to read our Spring 2024 update and, as always, DannLaw is here to help you.

Marc

Complicated and impenetrable arbitration agreements like this one from Wells Fargo cost consumers millions each year. DannLaw’s Consumer Arbitration Team helps attorneys and families fight back.

In a recent article posted on Columbia Law School’s Blue Sky Blog, Jeff Sovern argues that businesses should not be able to use the Federal Arbitration Act (FAA) to harm consumers. We agree. This flaw in the law costs American families tens of millions of dollars each year. That’s why DannLaw has been fighting for real reform of the FAA including urging the Consumer Financial Protection Bureau to issue a new rule that would block the use of arbitration clauses in consumer financial contracts. Unfortunately, until the CFPB or Congress acts, consumers will continue to be victimized by greedy corporations.

But that doesn’t mean consumers are defenseless. That’s because the experienced, dedicated attorneys and staff at DannLaw’s Consumer Arbitration Practice Group are here to help. We work with consumers and attorneys across the nation to file, pursue, and win arbitration cases against the biggest players in the consumer financial game.

Whether you’re an attorney battling on behalf of clients or a consumer who has been ripped off by a mortgage lender, credit card company, or retailer, contact the consumer arbitration experts at DannLaw. We’re ready to help you fight and win. To learn more complete our contact form or call 330-294-3226.

We’ve posted Mr. Sovern’s CLS Blue Sky blog post below. To read a version with footnotes click here.

Consumer protection laws face a fundamental enforcement issue: Because consumer claims are typically for small amounts, and litigation is expensive, it rarely makes economic sense for consumers to litigate their claims individually. Partly to deal with this problem, lawmakers created class actions so the cost of litigation could be shared among many claims. But businesses have used the Federal Arbitration Act against consumers, inserting into agreements arbitration clauses that block consumer class actions. The U. S. Supreme Court has ruled these clauses are valid.[1] As a result, few consumers assert claims subject to these contracts unless a substantial amount of money is at issue.

This leads to two unfortunate outcomes. First, in many situations, merchants employing arbitration clauses need not fear that they will face private enforcement of consumer protection laws and so are insufficiently deterred from engaging in misconduct that might otherwise lead to liability. Second, consumers lack an effective means to secure compensation unless they suffer huge losses. The problem is worsened by the fact that consumers cannot understand arbitration clauses and so surrender their rights to litigate in court without realizing that they are doing so.

In a new book chapter, I argue that Congress should amend the FAA to exclude consumer claims from the FAA’s coverage until a dispute has arisen. Otherwise, the Consumer Financial Protection Bureau (“CFPB”) should use its rule-making power to limit the use of arbitration clauses in consumer financial contracts.

Arbitration and Claim Suppression

Multiple studies show that few consumers commence arbitration claims unless substantial sums are at issue. [2]Arbitration clauses’ claim-suppression effect was illustrated colorfully by one advocacy group when it observed that in many years more American consumers are struck by lightning than win a monetary award in arbitration.[3]

Consumer products and services companies are keenly aware that arbitration clauses insulate them from liability. One lawyer defending against class actions described arbitration clauses as a “silver bullet” for defeating consumer cases,[4] while another acknowledged that a “claim that is $162 – an individual claim – is not one that any rational litigant would litigate.”[5] In Judge Richard Posner’s words: “The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.”[6]

Arbitration and Consent

Arbitration derives its legitimacy from consent. As the Supreme Court has noted, “[a]rbitration under the [FAA] is a matter of consent . . . .”[7] But whether consumers genuinely agree to arbitration is debatable.

Research demonstrates that consumers cannot understand arbitration clauses or their impact. Thus, an empirical study of consumer understanding of an arbitration clause in a credit card contract found that less than 9 percent of the respondents realized both that the contract included an arbitration clause and that it blocked them from suing in court.[8] Despite that contract’s class action waiver, four times as many respondents thought they could still participate in a class action as recognized that by agreeing to the contract they would surrender their right to join a class action. Even when respondents were told to assume they had agreed to a contract barring them from joining in a class action, less than a third realized they were foreclosed from doing so. Just one respondent in 16 realized both that (1) the contract they had been shown would prevent them from joining a class action, and (2) as a general matter, class action waivers block participation in class actions. When consumers can neither recognize that they are waiving the right to participate in a class action nor that such a waiver would be given effect, it is difficult to justify the claim that they have consented.

A CFPB telephone survey found that a majority of its respondents believed they could join a class action despite having agreed to a contract that included a class action waiver.[9] Similarly, only one consumer in 14 understood that an arbitration clause would block them from proceeding in court. And a more recent study also found consumers do not understand arbitration clauses.[10]

At the end of the day, if consent – the source of arbitration’s legitimacy – means no more than signing a contract that consumers cannot understand, it is hard to see arbitration as legitimate.

Efforts to Carve Out Consumer Claims From the FAA

Members of Congress have repeatedly but unsuccessfully introduced bills to amend the FAA to eliminate consumer disputes from its coverage. In the 2010 Dodd-Frank Act, Congress authorized the CFPB to regulate arbitration.[11] The CFPB issued a rule which would have barred the use of class action waivers in arbitration clauses in consumer financial contracts.[12] But Congress invoked the Congressional Review Act (“CRA”)[13] to block the CFPB’s rule from going into effect.

The CFPB should issue a different arbitration rule. The Congressional Review Act bars administrative agencies from issuing “a new rule that is substantially the same” as the rule Congress struck down.[14] That bars the bureau from producing a rule banning class action waivers. Nevertheless, that still leaves the bureau options. Indeed, consumer protection advocacy groups recently petitioned the bureau to promulgate a new rule blocking the use of arbitration clauses in consumer financial contracts. The petition differs from the CFPB’s blocked rule because the regulation it calls for would not be limited to class action waivers and because the proposed regulation would be based on lack of consumer comprehension of arbitration clauses rather than the claim-suppression effect of class action waivers.

Conclusion

Arbitration clauses have become common in consumer contracts as a device to block the filing of consumer class actions against businesses catering to consumers. Consequently, it no longer makes economic sense to assert many consumer claims, and therefore companies are insufficiently deterred from violating some consumer protection laws. Using arbitration clauses to preclude class actions lacks legitimacy because consumers do not knowingly consent to arbitration. Congress should amend the FAA to exclude consumer claims from its coverage, or, failing that, the CFPB should use its authority under the Dodd-Frank Act to protect consumers against the use of arbitration clauses in consumer financial contracts.