Clark has long objected to companies putting mandatory arbitration clauses into contracts. Many car dealerships, home builders, cable providers, cell carriers and others do this. Why? They want to be able to cheat you and not worry about consequences.

The city of San Francisco now is suing Bank of America over its mandatory arbitration process. Stacked-deck kangaroo courts allow BoA to win 99.9% of the time with the arbitrators they choose. Sounds like the results of a Third World election.

One supposedly impartial arbitrator in Minneapolis has heard more than 18,000 cases. The arbitrator found for businesses 18,045 times and for the consumer 30 times. How can that be unbiased?

Clark loves alternative dispute resolution, which offers a mediation process where both parties agree not to go to court and instead arbitrate in a mutually decided upon forum. But that's not what BoA is offering; their arbitration is just a joke and they have no intention of fairness. The irony is that it will be up to courts again to decide if BoA's use of the mandatory arbitration process is fair. Boy, that bank is lucky that Clark's not sitting as the judge!

The stock brokerage industry is divided into two camps: There are the brokers who work on a full commission from the investments they sell you, and those that get paid based on the financial advice they give you. Meanwhile, consumer protection in the field is very weak. The industry has a mentality that brokers are salespeople who shouldn't have to follow any business code of ethics. It's as if the majority of the industry doesn't really care about the financial interests of its clients. In fact, the industry even conned the federal government into passing a law that says brokers aren't liable for bringing you to financial ruin so long as they presented you with "suitable" investment options. If you sign up with a stock broker, you actually waive your right to take them to court if they cheat you. You have to sign a form that forces you to go through company-run arbitration if there's a dispute. That makes it nearly impossible to get back your lost money! A study showed that you have a one in ten chance of winning in arbitration against stock brokers. It's a real kangaroo court scenario, according to Clark. Now, Clark has no problem with arbitration if it's mutually agreed upon by both parties. But this kind is crammed down your throat. Sure there are good brokers out there, but many others are not ethical. Clark's advice is that you never go to a full-commission stock broker. Only use brokers who get paid for their advice, not those who earn a commission from the investments they sell you.

One of the most unfair institutions of our capitalist system is arbitration. Cable, phone, insurance, travel and insurance companies are all establishing arbitration panels as a way to limit the rights of customers. In arbitration, customers are not allowed to take a company to court for any reason. Instead, an arbitration company comes in and there is another kind of “hearing” that determines whether the company did anything wrong. The problem is that the company picks the arbitration company. And if that arbitration outfit doesn’t find for the company, the outfit is fired. So, of course the arbitrators will find for the company. Arbitration procedures are always one-sided, and it’s wrong of the U.S. Congress not to pass a new law preventing them. California and Arizona have their own laws regarding arbitration. Arizona uses something called “alternative dispute resolution,” which is voluntary. It allows people to try to work out problems with companies first, and then they can go to court if necessary. California has banned arbitration all together. Clark would like the federal government to catch on and pass a law nationwide.

Clark has been on a slow burn about arbitration for a very long time. The practice of arbitration is imposed on us today by stockbrokers and credit card companies, and we are powerless to control it. Why is arbitration so bad? Most of the systems set up by these companies are designed to cheat customers. These businesses basically force us into agreements that say we will agree to their arbitration system. When a customer gets into arbitration, the companies win 99 percent of the time. According to the Wall Street Journal, that happens because of the slanted arbitration panel. Companies take what are supposed to be neutral spots and they fill them with biased arbitrators. For instance, the “public arbitrators” actually work for a brokerage house and will always find in favor of the company. The good news is that Congress is looking into the practice of arbitration. Clark thinks mediation should be voluntary, not arbitrary. If it were voluntary, the customer would have to feel comfortable with how the process would work. So consumers would never enter arbitration if they knew the rules were bogus. That is the way it should be.

Clark has had a bias against what’s called “arbitration” for a long time. Voluntary arbitration is okay. That is when both parties volunteer to go to an arbitrator and work out their differences. But the private or mandatory process included in some business contracts is usually very underhanded and abusive. And more and more companies are implementing them. Arbitration is often used as an alternative to going to court, but it’s almost always in the favor of the business and not the consumer. One of the main industries involved in the abuse of consumers is the homebuilding industry, according to Smart Money magazine. Homebuilders include arbitration clauses in their contracts that are entirely anti-consumer. It’s almost a stacked deck against buyers, who have no chance with the biased arbitrators and biased arbitration panels that homebuilders hire. Car dealers are also adding arbitration clauses, some of which say that the consumer must pay $4,000 to settle an arbitration. In actuality, it would cost a couple hundred dollars at most. Courts recently decided that some of the car dealer arbitration clauses are, by their very nature, illegal and unenforceable. So you can still go to court. But credit card companies and insurance companies have implemented arbitration clauses and they “win” 99 percent of the time. So, it’s clear that most of these systems are inherently flawed. No one wants to go to court; it’s no fun. But you don’t want to enter into arbitration with these businesses either. Look over your contracts for a mention of an “arbitration clause.” If there is one, run the other way!

Clark gets a huge number of calls from listeners who have had serious problems with their mortgage lender. Lenders have been known to mess up loan balances and to fail to pay taxes on time and sometimes not at all. As a result, a homeowner’s insurance can be cancelled and the homeowner has to buy ultra expensive insurance because no one wants him or her as a customer. Then, when people try to sue them for fouling up, it’s not possible because, according to their documents, lenders only allow “arbitration” as a way to resolve disputes. And the arbitration process is fixed in favor of the lender nearly every time. But all that is about to change. Because of the incredible numbers of abuses, Fannie Mae and Freddie Mac are taking a stand and are saying that they won’t allow any lender writing loans for them to require mandatory arbitration. They will no longer be able to refer disputes to a third party arbitrator, and it’s about time! Clark doesn’t object to arbitration or mediation. Alternative dispute resolution, in general, is a great thing. But it should be the choice of both parties to go, and each party gets to decide whom they will use. Banks have been the greatest abusers of the arbitration system. One of the nation’s largest banks won arbitration 99.9 percent of the time. Now, that is ridiculous! It’s cynical, abusive and wrong. And now it won’t be allowed for nearly all mortgage loans written in the country. Clark saw information recently about how the public feels toward mortgage lenders. The industry received one of the lowest scores ever reported in the history of surveying customer satisfaction. So, let’s hope this knocks some sense into lenders’ heads.