Federal telecom regulators took a big pro-consumer stride Thursday by approving new rules that could significantly limit the ability of cable and phone companies to farm their customers’ personal data while vowing to proceed with further legislative action in February that takes aim at “mandatory arbitration” clauses in customer agreements.
Currently, Internet service providers (ISPs) have free reign over most sensitive customer data. Telecom companies can gather information about customers’ finances, health, children, geolocation, social security numbers, web browsing history, application usage, and much more.
The Federal Communications Commission’s (FCC) new rules establish clear and enforceable policies about how companies can use such data for web tracking and advertising purposes, and give consumers more control over how their data is used and shared by requiring them to consent or opt-in to such activity.
Customers of giant corporations such as AT&T, Comcast, and Verizon have little legal recourse in the event they are harmed by their ISP due to the inclusion of forced arbitration clauses that effectively strip them of their right to sue. Although the FCC’s new policy did not address the arbitration issue, the agency committed to moving forward with new rulemaking early next year to help restore and protect consumer rights.
“As my colleagues have said, the time has also come to address another important consumer issue and that is the harmful impact of mandatory arbitration requirements that are imposed in the contracts of communications service providers,” FCC Chairman Tom Wheeler said in an agency meeting Thursday. “To address this issue comprehensively, we have begun an internal process that is designed to produce a Notice of Proposed Rulemaking (NPRM) on this very important issue no later than February 2017.”
Mandatory arbitration clauses are usually buried in the fine print of customer contracts and other agreements that customers must accept before receiving products and services. The clauses force consumers to forfeit their right to seek a legal remedy through the court, forcing them to take their complaints to a private arbitrator of the company’s choice. This arrangement tips legal disputes in the company’s favor, and consumers are left without a means of appealing a decision.
Companies started using forced arbitration about 20 years ago despite public outcry that the clauses were giving companies license to steal. The backlash, however, finally seems to be leading to more pro-consumer measures.
In September, the Centers for Medicare and Medicaid Services (CMS) announced a final rule that bars nursing homes and other long-term health care facilities from requiring patients and their families to sign mandatory arbitration agreements that preclude them from suing. That rule is scheduled to take effect on Nov. 28.