Action 9

‘Stacked against the consumer’: Arbitration clause limits access to courts

LEESBURG, Fla. — A homeowner in Lake County claims a contractor kept his big deposit for a job that was never completed, but an arbitration clause is denying him a day in court.

Action 9 investigates mandatory arbitration clauses that catch many consumers by surprise when their small claims cases are suspended.

John Kelty had big plans for a concrete deck and screen, but after signing a contract with Blue Skye Screening last year and paying a $7,600 deposit, his legal battle is far from over.

“They collected the money, did no work, and just walked away,” Kelty said.

READ: ‘It’s ridiculous’: Consumers struggle to get titles from online used car dealer

He said the company failed to provide a qualified concrete subcontractor, so he hired his own. He still wanted Blue Skye to install the screen, but claims the company wanted an additional $4,000 upfront.

Kelty felt he had already paid a big deposit, and no work had been done. “I said I’m not paying anything until someone comes out here, I want to see physical work.”

Blue Skye cancelled the contract. Kelty said that when the company refused to return his deposit, he went to small claims court to get his money back. That was when he hit a brick wall.

Kelty’s contract with Blue Skye included an arbitration clause requiring all disputes to be settled by an arbitration panel, not in a courtroom.

So, his case was stayed by a judge in Lake County. It was suspended until the parties go to arbitration because of that clause. Kelty called it a contract trap that he never expected.

READ: ‘That’s not good’: Homeowners feel burned by solar power promises

“And they said no, sorry you have to go to arbitration,” Kelty said.

Groups like the National Consumer Law Center say most consumers have no idea they agreed to arbitration. The clause can even be found in credit card and appliance purchase agreements.

“Just about every contract you sign and certainly anything you sign online, and many other contracts have clauses that take away your access to our courts,” said Lauren Saunders with the National Consumer Law Center.

Consumer experts say arbitration clauses can be buried in small print, warranties, and even when consumers click “I agree” online, they might unknowingly be agreeing to arbitration. Arbitrators aren’t bound by legal precedent and evidence rules. There are also limited appeals.

“The use of forced arbitration has been going on for several years, but it has accelerated in the last few years,” Saunders said.

Todd Ulrich contacted managers at Blue Skye Screening. They said Kelty was offered a partial refund after expenses, he breached the contract, and the company enforced an arbitration clause that had been fully disclosed.

Kelty said he’s only asking for a day in court to prove his case and get his money back. “You know it’s stacked against the consumer.”

Your best defense against forced arbitration is to read before you sign, then seek out a company that doesn’t require it. Even if it’s in your contract, seek legal advice, as some companies will negotiate before going to arbitration.

Todd Ulrich

Todd Ulrich,

I am WFTV's Action 9 Reporter.