Among the many sobering lessons of the massive Equifax data breach this year was the need to address the widespread use of forced arbitration clauses. Such clauses are a common tactic used by companies to avoid lawsuits, and customers who sign them essentially forfeit their rights to resolve disputes in the courts. Equifax, after exposing the sensitive financial information of some 145 million consumers, even had the gall to tuck one of these clauses into the TOS for a product it offered to those affected by the breach.
But while consumer groups and some lawmakers have been sounding the alarm about forced arbitration for years, don’t expect Equifax to stop the practice anytime soon. At a Senate hearing on Capitol Hill today, Paulino Barros, the company’s interim CEO, refused to guarantee that the company would not force consumers into arbitration to resolve disputes.
Barros was responding to a question from Democratic Senator Richard Blumenthal of Connecticut, who was seeking assurances that the embattled company has changed its ways.
Blumenthal: Consumers expect to have a right to go to court and have their rights vindicated there. Can you guarantee that you will not force them to use arbitration?
Barros: I believe the consumers have a choice to choose the products that they need.
Blumenthal: But if they choose your products, they will not be forced into arbitration. You’re guaranteeing that?
Barros: We work according to the law, and use the tools that the industry uses to have arbitration in place.
If nothing else, the frustrating exchange highlights the extent to which companies have come to rely on forced arbitration—and the fact that they’re unlikely to give up the practice without legislation forcing them to. Too bad that doesn’t seem like it will happen anytime soon.