WSJ Editorials Loving Forced Arbitration At Odds with Actual Facts In Its News Story
By Amy Radon, Staff Attorney
It’s easy for big businesses and their allies to talk about arbitration in the abstract. “It’s cheaper than court,” they say. “It’s quicker and more informal than court,” they say. And my personal favorite: “Without arbitration, consumers would be stuck with having to join class actions, which we all know only line the pockets of those greedy trial lawyers.”
But when you hear the stories of actual folks whose rights have been violated by big business—and who have no means of holding the business accountable for its wrongdoing because of an arbitration clause—arbitration becomes impossible to defend.
Take, for example, an article that appeared on the front page of the Wall Street Journal last week under the headline, “Hefty Bank Fees Waylay Soldiers.” The article described the growing problem of banking overdraft fees that hit our service members particularly hard. As the article explained, one service member, Cpl. Rosalio Montes, a Marine at California’s Camp Pendleton, needed $500 for a family emergency, so he used his overdraft privilege to withdraw $500 from his Navy Federal Credit Union account:
He expected a $20 fee, which he figured he could pay after his next paycheck. But after payday, Cpl. Montes found the bank had taken out the $500, plus $60 in overdraft fees. The fee tripled because the ATM limited his withdrawals to $200, requiring him to take the cash in three chunks. He says he was “in too deep” and couldn’t support his wife and children.
The article also told the story of Army veteran Charity Williams, who lost track of one of her accounts and incurred a number of $35 overdraft charges for over-drawing her account by as little as $0.50.
While I applaud the Wall Street Journal for exposing what one of the article’s sources described as “the leading financial problem for many military personnel,” the Journal glossed over a crucial piece of the story. Buried in the last few sentences in the article, we learn that Ms. Williams, the Army Veteran, joined a class action in federal district court in Texas to try to hold the bank accountable for violating consumer protection laws, but the suit was dismissed because “many claims were too old or subject to arbitration.”
Why doesn’t this article expose both the “leading financial problem” for military personnel (overdraft fees) and the fact that service members can’t vindicate their rights against these banks because they are forced into individual arbitration instead of a class action in court? That’s the real story here. Think banks are going to change their overdraft policies when a handful of their customers file an arbitration, even though they’re still able to charge hefty fees to the rest of their customers? Absolutely not.
I suppose I had higher hopes that the Journal would publish the whole story here, but in hindsight, it’s no surprise that the article would gloss over the fact that the primary reason the banks can charge egregious overdraft fees to our service members is because of forced arbitration. The Journal has consistently taken a pro-big-business stance on arbitration and has trashed the class action mechanism at nearly every opportunity.
Take, for example, an editorial that appeared less than a month ago, entitled “Trial Lawyer Protection Act” (Dec. 23, 2013). The editorial touted the deeply-flawed Mayer Brown report on class actions, and proclaimed that the “only”—yes, “ONLY”—beneficiaries of expanding class-action lawsuits would be “plaintiffs [sic] attorneys—and their yacht builders.”
Even worse, the editorial went so far as to say that it was a “good thing” that “nine out of 10 arbitration agreements allowed banks to keep consumers from joining class actions.” Sure, it’s good for the banks who can get away with their wrongdoing. But it’s plainly not a “good thing” for wronged consumers like Mr. Montes or Ms. Williams who won’t get to have their day in court.