Yesterday the case against Clear Your Debt in Ohio was dismissed and sent to arbitration. Interestingly, the co-defendant Global Client Solutions’s request for arbitration under the Federal Arbitration Act was denied.
The ruling provides yet another example of why consumers should carefully evaluate debt relief services prior to signing any contract and make sure they fully understand the agreement before signing it.
The court ruling states:
On February 14, 2008, Plaintiff Jalenna Bowie entered into an agreement with Clear Your Debt, LLC (“Clear Your Debt”). Clear Your Debt is a debt resolution service designed to help people negotiate, adjust, and resolve debts when they have incurred credit card debt beyond their ability to re-pay. Ms. Bowie signed (via electronic signature) a “Client Service Agreement” with Clear Your Debt and initialed each page of the Agreement (also via electronic signature). Paragraph Seven of the Agreement contained an arbitration agreement by which “any dispute between the parties arising out of this agreement” would be submitted to binding arbitration under the auspices of the American Arbitration Association (AAA), or “to the extent possible” in accordance with the AAA rules. The arbitration provisions included a Texas choice of law provision, and a forum selection clause listing Austin, Texas as the agreed venue. The arbitration provision is in regular type and is clearly labeled with the heading “Arbitration of Dispute.”
Ms. Bowie reviewed the Agreement on line and was guided through the document by a Clear Your Debt representative. According to Ms. Bowie, the representative rushed her through the documents, summarizing each page, and telling her how and where to place her electronic signature and initials. Ms. Bowie claims that the representative never mentioned the arbitration provision when summarizing the Agreement.
The arbitration provision in the Agreement indicates that arbitration is to be conducted through AAA or under AAA rules. Plaintiff argues that she would have to pay $6500 up front to arbitrate under the AAA commercial arbitration guidelines, and that she could not afford this fee. Defendant contends that Ms. Bowie would be subject to a much reduced consumer fee schedule under the AAA rules. Although Ms. Bowie has not suggested that she would be unable to afford the consumer rates, in order to qualify for those reduced rates, the parties agree that she would have to abandon her request for declaratory relief under the Consumer Sales Practices Act
Plaintiff further argues that she reviewed and signed the Agreement while on the phone with a Clear Your Debt agent, who would summarize the documents and would tell her where to click to provide her electronic signature or initials as needed. Clear Your Debt contends that the agent was provided to answer any questions that Ms. Bowie may have had prior to signing the agreement, and there is no evidence that the agent would not have assisted her in understanding the arbitration terms if she had read the provision and had any questions with regard to those terms. Although Plaintiff testified that she felt rushed and relied on the agent’s summary of each page, she did not indicate that she asked for more time to review the documents, or that such time would not have been provided if requested. Clearly a consumer may feel some pressure to complete a transaction quickly when a sales representative is summarizing or rushing through a document and asking for signatures. However, a consumer of average intelligence and experience is still responsible for reading for understanding the terms of an agreement that she signs and accepts, when those terms are accessible and not hidden or misrepresented in any manner. There is no evidence that the deal would have been revoked if Ms. Bowie requested additional information or additional time to thoroughly review the documents. In addition, even if Ms. Bowie felt rushed during the review with Clear Your Debt’s agent, she had the opportunity to review the contract after signing, without the influence of the agent, and to rescind without penalty or obligation within three days after having signed the agreement. – Source
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