When a consumer signs a contract that includes a pre-dispute arbitration clause, they forfeit their legal right to file an individual or class-action lawsuit against the other party. These clauses require consumers to let arbitrators, rather than judges or juries, settle disputes that range from financial fraud to wrongful death. However, federal authorities continue to question the fairness of mandatory arbitration, and a new report reveals its effect on consumers who use financial services.
In recent years, the cases involving Bernard Madoff and other similar scam artists have made Ponzi schemes headlines in recent years. In March of 2009, Madoff pled guilty in federal court for running a massive Ponzi scheme that is said to be by far the largest fraud of this type in U.S. history, possibly involving more than $64 billion. Each year, Ponzi schemes cause thousands of unsuspecting investors financial devastation.