Consumer Protection Faces a 'Tsunami' in Court

By Karen Weise on April 27, 2012

A year ago today, a split Supreme Court issued a ruling that fundamentally changed the way consumers can pursue claims of corporate wrongdoing. In a 5-4 ruling in AT&T Mobility v. Concepcion, the Supreme Court said companies have the right to force consumers who sign contracts—like debit-card agreements and cell phone plans—to accept terms that require them to settle all disputes in private arbitration and waive their right to band together in class actions.

In just the first year, the ruling’s impact has been dramatic. “There is no case in the history of consumer law as harmful as Concepcion,” says Paul Bland, a senior attorney at the public interest law firm Public Justice. In a report released this week, the National Association of Consumer Advocates and the legal advocacy group Public Citizen, which represented the Concepcions before the Supreme Court, said they have identified 76 cases in the past year where potential class actions were shot down by judges citing Concepcion.

Companies have rushed to add class action waivers into the contracts or make existing clauses more bulletproof. Wells Fargo, for example, tightened up the language in its contracts in February to make clear that the only exception to arbitration is small claims courts. (The bank told the Berger Record that is policies are “are consistent with the industry.”) “There is a realistic possibility that the decision will lead to a virtual end of class actions against businesses,”  READ MORE