How to Protect Yourself from Binding Mandatory Arbitration

Binding Mandatory Arbitration Clauses, also called BMA clauses are not designed to help consumers or save them money, they are designed to hurt you.

BMA clauses strip you of your rights for litigation in a real court. They are virtually always written to help the other party, the companies, not you.

BMA clauses are so bad that few consumers try to use them to solve a dispute. Instead, the consumer walks away from the dispute, even when the consumer has been terribly hurt. One study shows that in 50,000 arbitrations, consumers brought only fifty of those arbitrations. The companies brought the rest.

Hundreds of types of businesses are sneaking these clauses into their paperwork. If you care about your rights, you must understand this issue, and help us fight binding mandatory arbitration.

So what can a consumer to do fight back against companies that use the mandatory binding arbitration clause?

First, you can shop around for a credit card that doesn't utilize the BMA in their disclosure. Yes, you will have to search high and wide for these issuers but they are out there. Usually, smaller banks, credit unions and AARP provide credit cards without this unfair clause.

If you are already a card holder of a bank that uses the BMA cancel the card immediately. When you close your account, send a short letter explaining that your tax dollars support a civil justice system and that mandatory binding arbitration is unnecessary and transfer your balance to a non-BMA card. If they lose enough of their members because of this it will make them think twice before they try to screw the consumer, but I doubt it. Hit them hard where they will feel it.

Car dealers and home mortgages are other major users of the BMA.

Before shopping for a car, give the dealer a call and ask if the BMA is part of their agreements. Be willing to walk away from a dealer who insists on using the BMA in the loan or sales contract. It will be worth your efforts. Use the following 10 tips when buying a car:

SLOW DOWN. Speed in the automobile transaction is a very dangerous thing

JOIN A CREDIT UNION. Negotiating skills aren't needed at most credit unions. You generally receive the lowest price you qualify for on automobile loans. Find a credit union using the Credit Union National Association (CUNA) service.

BUDGET BEFORE YOU SHOP. Know what you plan to spend on a car before you begin to shop. Want help developing a budget?

DO YOUR HOMEWORK. Sellers can't tell you if the cars they sell are unsafe or mechanically unreliable. To check out vehicles use noncommercial sites such as the Center for Auto Safety.

DON'T DEAL WITH DEALERSHIPS THAT REQUIRE YOU TO SIGN A BMA (BINDING MANDATORY ARBITRATION) CLAUSE. Call dealerships before you visit them.

DON'T BUY ON YOUR FIRST VISIT. All dealerships want to sell you the first time you're there. Why? They make more if you don't shop.

NEVER LEAVE A DEPOSIT UNTIL THE SELLER HAS AGREED TO YOUR PRICE. Sellers want your deposit so you can't leave.

DON'T FALL FOR "SPOT" DELIVERY. You know: take it home "on the spot," the first time you've seen the car. Spot delivery means your emotions, not your pocketbook, are ruling the transaction.

STOP THE TRANSACTION IF YOU FEEL PRESSURED OR CONFUSED.

REMEMBER THAT THE PRICE OF THE NEW CAR ISN'T WHERE SELLERS MAKE MONEY! Many dealers will sell you a car for "cost" but still make thousands on you.

Do not ever deal with home lenders that use the BMA clause. Freddie Mac or Fannie Mae do not allow BMA clauses nor do many credit unions. Once again, shop around for a reputable lender.

Finally, write your senator and congressperson personal letters opposing the BMA in consumer, employment and franchise contracts. A personal letter is a very powerful statement.

Demand them to sponsor legislation to help protect consumers from these abusive clauses.