cleveland.com (November 28, 2014 6:30 am) -- Most of us know more about Kim Kardashian's rear end than we do about those pesky arbitration clauses found in our credit card, cell phone and online service contracts.

But - reality check - we're more likely to butt up against an arbitration clause.

We're likely to find mandatory arbitration clauses tucked into contracts for data plans, cable and satellite TV service, investment broker agreements, credit cards, home repairs, bank accounts, payday loans, nursing homes - the list goes on.

In short, these clauses strip consumers of our right to go to court if we're ever wronged.

So why aren't more consumers up in arms about arbitration?

Well, lawyers at St. John's University Law School recently conducted a study and found that even when consumers know there's an arbitration clause in a contract, they often don't understand what it really means  --  even when they think they do know.

Researchers showed consumers a standard credit card contract with a binding arbitration clause and then asked them a series of questions.

The findings:

  • Most people didn't realize there was an arbitration clause in the contract.

 

  • Of the 40-odd percent who spotted the clause, almost two-thirds believed - wrongly - that if the disputed amount was too big for small claims court, they could still go to common pleas or federal court.

 

  • Less than 9 percent both spotted the arbitration clause and correctly said it would prevent all consumers from going to any court to resolve a dispute.

Remarkably, 87 percent of the 303 people who swore they'd never agreed to a contract that contained an arbitration clause were flat-out wrong.

How did researchers know? They asked people if they did business with AT&T Mobility, Sprint, Verizon, PayPal or Skype - companies whose contracts routinely require consumers to agree up front that if they ever have an issue with the company, they can only resolve it through binding arbitration.

"We don't know about the remaining 13 percent," says law prof Jeff Sovern, one of the authors of the study. Sovern says the number of people who had unwittingly agreed to mandatory arbitration is likely higher because researchers asked consumers about contracts with those five companies, not about every company they did business with.

It's tough for people to make it through the fine print in most contracts, let alone decipher what's there.

"If you buy any new album from iTunes, you can listen to the entire album in the time it would take to read their contract," says Paul Bland, executive of Public Justice and a longtime foe of binding arbitration in consumer contracts.

Even when contracts include opt-outs, which some credit card and many nursing home contracts do, few consumers exercise that option - mostly, Bland contends, because they don't understand what they're giving up.

A preliminary study by the Consumer Financial Protection Bureau found that arbitration clauses in credit card contracts were often more difficult to understand than other parts of the same contract. It also found that 9 of 10 arbitration clauses bar consumers from banding together to fight a perceived wrong.

"The rights that people are losing actually have a big impact on people," Bland says.

Some of the rights you could say bye-bye to include being able to appeal to a judge even if the arbitrator made a legal error; being able to gather evidence from the other side; and ultimately, the ability to share the arbitrator's decision with other consumers, who may have an interest in knowing. Arbitration is secret by design.

It's not only "consumers" who are affected. It's the little guys in any dispute where industry pays or sends repeat business to arbitrators.

Recently, the Public Investors Arbitration Bar Association did a study that took the Financial Industry Regulatory Authority to task over FINRA's claims its pool of mostly white arbitrators was diverse. PIABA said FINRA doesn't have adequate disclosures in place to ensure arbitrators don't have conflicts of interest or biases that could impact their decisions. In 1992, PIABA found, the "win" rate for investors in arbitration was 60 percent. In 2013, investors won in arbitration only 42 percent of the time.

A series of Supreme Court decisions have emboldened companies that force customers in to arbitration and, at the same time, limited states from acting to curb binding arbitration.

There is a little sliver of hope for consumers, though. When it passed the Dodd-Frank Act, Congress ordered the CFPB to study arbitration clauses. If the bureau finds the clauses aren't fair, the bureau has the authority to restrict the use of mandatory arbitration by financial industries it regulates.

Right now, the CFPB is finishing up the second phase of its study, which will hone in on consumers' understanding of arbitration clauses. At that point, it will decide whether it needs to act.

If the bureau's findings are anything like those of the law school study, it must. Being stripped of our rights shouldn't be a cost of doing business.