Fraud on the Government and Consumer Fraud – Epidemics of Equal Proportion

09/25/2013 // Justice News Flash: Featured Column (Press Release) // Kathleen Scanlan // (press release)

The False Claims Act is a powerful piece of legislation that has helped return billions to the federal coffers. It’s a great example of our legislative and legal system working at its best. That’s partly why it’s hard to stand on the sidelines while a different kind of fraud is allowed to flourish and grow because its victims are stripped of their right to sue in court. It’s fraud on consumers and it’s a growth industry because of a series of decisions by the Supreme Court that protect the companies we all contract with (think of your cell phone provider, your cable company) and their insistence that all disputes be resolved by arbitration in a private venue instead of a public court. Essentially, if you are a consumer in this country (and let’s face it we all are), your ability to use the courts to redress grievances in your consumer transactions has been significantly curtailed, if not completely eliminated.

How did that happen? How is it you don’t know about it? Paul Bland, my esteemed colleague at Public Justice who has fought on behalf of consumers on this issue for years, has a recent post that sums up the issue pretty well. Every consumer in America ought to understand this issue and the impact it has on them.

Of course, not every consumer will find themselves in the dire straits described in Bland’s post. But look at any cell phone contract, any cable bill, any gym membership or any of the other form contracts millions of Americans sign each and every day. Heck, look at the terms of use of the software on your electronic devices that you weren’t even able to read until after you opened the box. Chances are there is an arbitration clause buried in the fine print on the back of the form contract requiring every consumer to give up the right to use the courts and to arbitrate every dispute. Paul Bland and others have written extensively on how unfair this is for consumers and how it opens the flood gates on consumer fraud of all kinds. For more information about the implications of arbitration clauses to the proliferation of consumer fraud, go to

Leaving aside the take it or leave it nature of these clauses in form contracts and their inherent unfairness to consumers, Americans should be alarmed at how these arbitration clauses fundamentally alter our legal system. Our legal system is built on the premise of open courts and the rule of law. That means new law develops out of the interpretation of prior decisions which everyone can access. Arbitration, on the other hand, is a private and confidential forum. There are no decisions published for anyone to see. Lawyers and victims cannot review prior decisions. Victims cannot tell if their issue is an isolated incident – or the tip of an iceberg. Even the arbitrators will not know of other similar actions or conduct. Journalists and others interested in transparency have no recourse to get information on what happens behind the closed doors of an arbitration. This is not how our legal system is supposed to work.

Fraud on the government is an epidemic in this country. However, it’s pointless to fight one plague while allowing another equally destructive one to thrive and grow. To learn more about the differences between voluntary arbitration and the forced arbitration in consumer contracts visit

By Kathleen Scanlan – Whistleblower Lawyer

Media Information:

Phone: 866-598-1315
Url: False Claims News