How Spotify Lets Your Rights Get Lost in the Fine Print - and What You Can Do About It

March 26, 2015

Nan Aron | President, Alliance for Justice

The moment you sign up for the music streaming service Spotify, you lose some very important rights - and Spotify wants to bury what you're losing in the fine print.

Spotify specifies that when listeners click "sign up," they agree to its terms and conditions - found on a separate page of the Spotify website. Buried in the fine print of those "terms and conditions of use" is a forced arbitration clause. As the ad says, that means if you have a dispute with Spotify, you have to take your case to a decision-maker at a firm they choose - not a judge or jury. In addition, if Spotify violates the rights of thousands, even millions of its listeners, they can't band together to seek justice.

Interested in learning more, see the full text of Nan's piece at the Huffington Post.

Retailer tries to hold customer’s money hostage to forced arbitration

By Trevor Boeckmann
AFJ Dorot Fellow
As we detail in our short documentary Lost in the Fine Print, forced arbitration clauses have become omnipresent in American society.  They’re used by companies to prevent consumers from having the chance to stand up for their rights in court when they’re harmed.  Yet most of these clauses are buried deep in the fine print of contracts and terms of service.

Now Walmart, already a corporate bad actor in so many ways, has taken this strategy to a whole new level.  They found a way to hold a customer’s money hostage until she agreed to forced arbitration.

KTRK-TV in Houston reports that on Black Friday, local shopper Maria Selva tried to buy a new TV at the big-box retailer. Walmart had sold out of the TV by the time Selva came to purchase it, but employees gave her a coupon, and had her pay in full.

She thought she could just pick up the TV at a later date.  But after she’d already paid, she was given a notice telling her she had to register online.  When she went online, she found that registering the coupon meant agreeing to forced arbitration.  She refused to accept the terms, and contacted Walmart to ask for a refund.

Walmart said no.

Instead, the company told her she would have to agree to forced arbitration, receive the TV, and return the TV.  Only then could she receive a refund.

It wasn’t until KTRK contacted the company that Walmart finally relented and issued a refund.

The consequences of forced arbitration can be great.  In Lost in the Fine Print we document the stories of Nicole Mitchell and Debbie Brenner, victims of discrimination and fraud who were never allowed to defend their rights in court.

Walmart isn’t the only company that has tried to find creative ways to impose forced arbitration.

Take General Mills, for example.  Last spring, we told you about their new arbitration policy, which purported to force consumers into arbitration if they entered a company contest, printed a General Mills coupon, or even “liked” Cheerios on Facebook.

But public pressure forced General Mills to back down.  Now we’re putting the pressure on other companies.  Join our campaign to end forced arbitration and protect everyday Americans.

Watch one consumer’s battle against Walmart and forced arbitration

Arbitration Fairness Act would reopen courthouse doors for millions of Americans

AFJ released this statement today on the reintroduction of the Arbitration Fairness Act:

Coast Guard delivers supplies to the
"cruise from hell"

Federal legislation introduced on May 7 to ban the increasingly common practice of forced arbitration “is urgently needed to reopen the courthouse doors to millions of Americans,” according to Alliance for Justice President Nan Aron.

Aron commended Sen. Al Franken (D-Minn.) and Rep. Hank Johnson (D-Ga.) for reintroducing the Arbitration Fairness Act, which restores Americans’ rights to have their day in court. Those rights have been undermined by the increasing use of forced arbitration and a series of recent Supreme Court decisions, most notably AT&T Mobility v. Concepcion.

“From cell phone purchases to nursing home agreements, to gaining employment, consumers and employees are being forced to accept arbitration clauses – and to potentially cede their civil and labor rights – in every aspect of their lives.

Sen. Al Franken

Rep. Hank Johnson

“For example, anyone who saw the pictures of conditions aboard the Carnival Cruise ship Triumph after it was disabled by a fire knows why it was dubbed ‘the cruise from hell,’” Aron said.  “But those passengers may have a hard time suing.  When they bought their tickets, there was a forced arbitration clause in the fine print.”

Under forced arbitration, consumers who buy defective products or are overcharged for a service are barred from taking their cases to court.  Instead, they must use a private arbitration firm chosen and paid for by the business itself.  Forced arbitration clauses also often ban class-action suits, which allow individuals to band together to bring their common claims.

In addition to Carnival, the photo sharing service Instagram uses forced arbitration – and some fear Instagram’s parent company, Facebook, may be next.  The practice is also spreading to employment contracts, threatening to make it nearly impossible for workers to sue over race, sex or age discrimination.

“Having a dispute settled by arbitration is like playing a baseball game in which the other team hires, fires – and pays – the umpires,” Aron said.  She noted that a study of top arbitrators for one major arbitration firm found that they rule for the corporations that hire them 93.8 percent of the time.

“The forced arbitration system gives corporations a free pass to break the law,” Aron said.  “The Arbitration Fairness Act would revoke that free pass.”

Read more about forced arbitration

● An overview of forced arbitration 
● AFJ’s report Arbitration Activism
● AFJ reports on AT&T Mobility v. Concepcion
● Press release from Rep. Johnson
● Press release from Sen. Franken
● Letter of support from AFJ and more than 40 other organizations

Arbitration: Is It Fair When Forced?

“Arbitration: Is It Fair When Forced?” was the subject of a Senate Judiciary Committee hearing held on Thursday, Oct. 13.

Sen. Al Franken (D-MN), sponsor of the Arbitration Fairness Act (S. 987) focused his questions and comments on the ways in which mandatory arbitration clauses put everyday Americans at a disadvantage in seeking justice against large corporations. Mandatory arbitration clauses, often embedded deep in the fine print of a contract, compel parties to give up their right to sue in court when they have a dispute. Instead of going before a judge and a jury, people who sign those contracts -- such as cell phone or employment contracts -- to appear before privately hired arbitrators... who are often hired by the corporation.

Among witnesses testifying was Dr. Deborah Pierce, a physician specializing in emergency medicine. Dr. Pierce described the forced arbitration process she underwent when she brought a claim against her employer for gender-based employment discrimination. Because an arbitration clause was a mandatory part of her employment contract, Dr. Pierce was barred from bringing her complaint in a court of law; instead, she was forced to take part in an arbitration process that was skewed in favor of her employer, who had a prior relationship with the organization appointing the arbitrator. Dr. Pierce was required to pay over $200,000 in arbitration costs, including half of the $450/hour fee charged by the arbitrator. People of lesser means simply would not have been able to afford to arbitrate their claims at all. When Dr. Pierce lost her case and argued that the arbitrator did not correctly apply the law to her case, the organization supplying the arbitrator responded that it “does not certify or attest to the abilities, competence, or performance of its arbitrators, and that it does not make any ‘warranties about the ability of the arbitrator to weigh facts and law.’”

Witnesses opposing the Arbitration Fairness Act attempted to argue that forced arbitration was beneficial to ordinary people, claiming that without it companies might not be willing to offer services like credit cards at all.

Questioning Victor Schwartz, a lawyer representing the U.S. Chamber of Commerce, Sen. Franken asked whether he thought it was fair to have people sign contracts with hidden mandatory arbitration clauses.  The Chamber lawyer simply replied “fairness is in the eyes of the beholder,” and other witnesses argued that people wishing to avoid mandatory arbitration could simply avoid opening bank accounts, buying mobile phones, or engaging in any activity that involves signing contracts. Under further questioning by Sen. Franken and Sen. Richard Blumenthal (D-CT), they were forced to concede that it was nearly impossible, in the 21st century to avoid the clauses which appear in the vast majority of credit card contracts, car financing arrangements, cell phone contracts, nursing home residency agreements, and in almost every agreement to purchase a good or service online.

Sen. Sheldon Whitehouse (D-RI), pointed out that the right to a court trial was a right held to be essential to the working of our American democracy by the Founders—so much so that a system to provide for courts of law and the right to a trial by jury in certain situations are written into the Constitution.  He described the situation posed by mandatory arbitration clauses as one in which citizens are unknowingly forced to sign away their rights to a fundamental freedom guaranteed in the Constitution, and wondered if the opinions of some of his colleagues about such clauses might be different if, within the fine print of a contract, people were forced to agree to give up their 2nd Amendment right to bear arms.

The Arbitration Fairness Act, introduced by Senator Franken and co-sponsored by Senators Blumenthal, Whitehouse, and others, would amend the Federal Arbitration Act to state that “no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of an employment dispute, consumer dispute, or civil rights dispute.” This act would return arbitration to its original intent under the law—as a process into which parties of equal power and standing could voluntarily choose to enter when a dispute arose and they both wanted to seek an alternative to litigation. Alliance for Justice is one of many organizations that signed a letter to the Senate Judiciary Committee supporting the Arbitration Fairness Act.

To learn more about the dangers of mandatory arbitration and the ways in which recent decisions by the Supreme Court to uphold forced arbitration clauses are benefiting corporations in evading justice when they violate the rights of ordinary people, download Alliance for Justice’s new report, Arbitration Activism: How the Corporate Court Helps Business Evade Our Civil Justice System.