For years, AT&T worked tirelessly to erode its customers' legal rights, using mouse print in its terms of service preventing consumers from participating in lawsuits against the company. Instead, customers were forced into binding arbitration, where arbitrators employed by the companies under fire unsurprisingly rule in their employer's favor a huge percentage of the time. Initially, the lower courts derided this anti-consumer behavior for what it was, critics highlighting that however brutally-flawed the class action system can be, binding arbitration in many ways made things worse.
But these lower court roadblocks quickly evaporated when the Supreme Court ruled in 2011 (Mobility v. Concepcion) that what AT&T was doing was perfectly OK. While lower courts saw this as an "unconscionable" abuse of consumer rights and the law, the Supreme Court bought into the ongoing myth that binding arbitration is a hyper-efficient, modern alternative to class actions. The Supreme Court reiterated its position in 2015, and now, thanks to AT&T, most companies employ similar language in their terms of service fine print.
This year, CBS News launched an investigation into AT&T and DirecTV's business practices and found a huge number of customers that were being systematically over-charged by the company, facing significantly higher rates after they'd signed up for what they thought would be a fixed, advertised rate. In response, a number of Senators fired off a letter to AT&T, urging it to explain itself and noting that binding arbitration appears to have removed a layer of accountability at the company, allowing problems like this to only get worse:"
Forced arbitration provisions in telecommunications contracts erode Americans' ability to seek justice in the courts by forcing them into a privatized system that is inherently biased in favor of providers and which offers virtually no way to challenge a biased outcome. Forced arbitration requires consumers to sign away their constitutional right to hold providers accountable in court just to access modern-day essentials like mobile phone, Internet, and pay-TV services.
AT&T's response? To deny that they use forced arbitration at all, despite the last decade of debate on the subject and AT&T's obvious legal win. According to AT&T you see, it can't be "forced" arbitration, because consumers have the freedom not to subscribe to TV or broadband service:
"At the outset, no AT&T customer is ever 'forced' to agree to arbitration," AT&T Executive VP Tim McKone wrote in a letter to US senators today. "Customers accept their contracts with AT&T freely and voluntarily; no one 'forces' them to obtain AT&T wireless service, DirecTV programming, or other products and services."
Except FCC data indicates that two-thirds of households only have access to one ISP at "next-generation" (25 Mbps) broadband speeds, meaning if many people want to be connected, it has to be via AT&T. Even if you happened to have alternative broadband options, those companies would also employ binding arbitration thanks to AT&T's win. It's a lose-lose scenario for consumers, and one that's not getting resolved any time soon given the current dysfunction in Congress, and the downright hostility toward consumers at the current FCC.
And yes, again, it's very true that the class action system is a broken mess that all-too-often results in lawyers getting far more than the people they're supposed to be representing. But in telecom, class actions do have a history of forcing change (remember when wireless providers used to extend your long-term contract every time you made a minor billing change?). And replacing that broken system with an even worse system that minimizes accountability, erodes consumer legal rights and reduces already dwindling incentive to behave certainly didn't do American consumers any favors.