SOLVING CONSUMER GRIEVANCES 235

G rie v a n c e s o f consum ers a r e o f m any kinds. S om e in v o lv e

shoddy m a n u fa c tu rin g , o th e rs re s u lt fro m m is re p re s e n ta tio n
quiet about the marketplace and their own role in that arena is as
a n d fra u d u le n t seffin g p ra c tic e s . In a lm o s t a ll in stan ces, th e re
is a fe e lin g o f helplessness. This is p a r t ic u la r ly tr u e w h e re much aroused by tasteless or condescending advertising practices,
th e m o n e ta ry v a lu e o f th e p ro d u c t c o m p la in e d o f does n o t delayed shipments of orders, billing errors or unacknowledged com
Justify litig a t io n to d e te rm in e one's rig h ts . The a u th o r sets plaints or correspondence as it is by outright violation of their legally
fo r th a s ix -p o in t p la n to g iv e consum ers " a b o n a -fid e th ir d cognizable rights. If a consumer feels he was taken in by a partic
p a r t y g rie v a n c e -re s o lv in g fo ru m v /ith a d e q u a te p o w e rs a n d
ularly high pressure sales pitch or by a promotional gimmick or
u n im p e a c h a b le c r e d ib ility ." She urges la w y e rs to " d e v o te th e ir
c o n s id e ra b le ta le n ts to th e p ro b le m i f o u r s o c ie ty is to b e seductive advertising commercial, he may still remain resentful even
a b le to fu lf ill its m ost fu n d a m e n ta l o b lig a tio n s to its c itize n s ." though he received value for his money. If his appliances break down
or his billing is in error, the fact that ultimately he receives satisfac
tion may not counteract his realistic appraisal of his own powerless
ness to assert and compel a resolution of his grievance as an equal in
the marketplace. Even disputed questions as to the adequacy of, or
need for, a repair, for example, leave consumers in the frustrated
W ANTED: A NEW SYSTEM FOR state of recognizing again their essential dependence on the good
S O L V IN G C O N S U M E R G R IE V A N C E S will and honesty of the merchants with whom they deal and their
inability to deal with these individuals on any real basis of equality.
by M ary Gardner Jones* A central factor in the consumers’ sense of powerlessness today
is the unavailability to them of any mechanism to which they can
resort in order to air their complaints, resolve differences which arise
between them and their merchants or repairmen, or to vindicate in
One of the most important aspects of consumer protection today
justice and unfairness when it is visited upon them in the market
concerns the availability of effective machinery for the resolution of
place.
consumer grievances in the marketplace. It is essential in considering
this basic problem to have a clear understanding of the nature and
In a d e q u a c ie s o f E x is tin g L e g a l M e c h a n is m s
scope of these grievances so that remedies can be devised which
to H a n d le C o n s u m e r G r ie v a n c e s
will be appropriate to the need.
Consumers encounter a variety of problems in the marketplace The court system traditionally has been looked to by us as the
which have serious impact on their own self-image, their sense of principal mechanism to hear and determine disputes among citizens
their own capabilities and their confidence in themselves as effective and to prevent injustices. Equality before the law is not only a con
actors and participants in the decisions affecting their daily lives. Too stitutional right, it is an essential prerequisite for a just and effective
often today, their basic marketplace experience is one of frustration, legal system—and ultimately for a responsive and stable society. Yet
powerlessness and, in some cases, outright injustice. Consumers feel today, except for lawsuits involving substantial amounts of money,
themselves the victims of a basic helplessness to influence the actions the law courts are no longer an effective or even feasible mechanism
of the marketplace power structure—-the manufacturers, sellers and for serving the great bulk of the needs of our citizens. O ur courts
advertisers. are for all practical purposes foreclosed to the individual citizen with
Consumer grievances generated by their marketplace experiences a typical grievance involving non-delivery or unsatisfactory servicing
range from outright frauds and deceptions to simple indifference to of goods, landlord defaults or indifferent performance under a lease,
their questions and problems. Not all consumer transactions of con or even personal injury or property damage claims which involve
cern to consumers give rise to legal causes of action or cause them relatively minor amounts.
out-of-pocket financial losses. For example, consumers’ sense of dis- For most citizens, the formalities and cost of litigation make re
course to the law either unpalatable or unfeasible. This is even more
* Commissioner, Federal Trade Commission. This article is based upon true for the types of grievances which consumers encounter in the
remarks delivered before the Center for Consumer Affairs at the University marketplace. The great bulk of consumer transactions is almost always
of Wisconsin, August 27, 1970.
234
 SOLVING CONSUMER GRIEVANCES 237
236 THE ARBITRATION JOURNAL
to affect their own destinies and they enlarge the area in which in
too small to warrant retaining of counsel even if the consumer could justices are perpetrated on consumers because of the lack of any
afford to do so. The National Commission on Product Safety in its effective deterrents on merchants from engaging in deceptive, unfair
recently issued Final Report (at page 74) estimated that the high and unjust practices. Finally, these deficiencies seriously jeopardize
cost of litigation today made it impractical for consumers to press and threaten the consumer’s confidence in the judgment, integrity
claims for defective products unless these claims were in amounts and responsibility of the entire business community which in the last
of a $5,000.00 to $10,000 range. It it clear that virtually no individ analysis is essential if our form of business economy is to continue its
ual consumer claims come close to these amounts. role in the allocation of resources and distribution of income.
Moreover, because of the relative informality of individual con It is essential that we concentrate our energies and resources on
sumer transactions, consumers frequently fail to retain the type of devising solutions to this essential and basic problem confronting
systematic, factual documentation of the transaction which is an es consumers in the marketplace today. In general, our efforts must
sential prerequisite to establish the rights and wrongs of the transac proceed along two general fronts.
tion and to meet the formal burden of proof requirements imposed
We must strengthen existing mechanisms for the elimination of
by our legal systems.
Even if the claims in suit make litigation possible or if a con the practices in the marketplace which give rise to the grievances
sumer is a defendant in a suit involving a consumer transaction, which consumers have in the marketplace and for the resolution of
problems still remain if the court system is to be resorted to. Con these grievances when they do occur. Given the psychological and
sumers named as defendants in consumer suits in most instances can realistic limitations on the ability or desires of consumers to assert
not afford to defend their rights no matter how meritorious they their rights within the formal structure of existing legal institutions,
believe them to be. Free legal counsel programs are extremely limited lawyers concerned with grievances suffered by consumers in the mar
and not generally available to all consumers whose incomes do not fall ketplace must look beyond the typical individual lawsuit as the sole
instrument to effect justice for their clients and concern themselves
below the poverty line.
with developing new institutions to handle consumers’ marketplace
Finally, most consumers, psychologically speaking, are not pre
grievances along a much broader front. We must urgently press for
disposed to assert or defend their rights in a litigative framework.
Many cannot afford the time to do so. Many have nagging un the development of a wide variety of complaint-handling mechanisms
which will be available to deal with the broad spectrum of consumer
certainties as to whether their feelings of dissatisfaction are meri
torious, and many simply trade off their dissatisfaction with the dissatisfactions which arise so frequently in the largely depersonalized
other demands on their time and decide to take no action. The and complex marketplace in which consumers must transact their
frustration and dissatisfaction nevertheless remain even though valid daily business. These mechanisms must be flexible enough to deal
with the broad spectrum of consumer grievances and not confine
complaints or claims are not pressed.1
The basic deficiencies in our legal system to handle consumer themselves exclusively to those situations in which consumers’ legal
rights have been violated.
grievances have serious consequences. They contribute to the deep
feelings of alienation which characterize so many citizens today. They O ur goal must be to open up as many channels as possible for
substantially increase consumers’ deeply felt sense of powerlessness the satisfaction of consumer grievances so that consumers encounter
ing frustration in the marketplace will have a sufficient number of
1. One marketing specialist concerned with consumer satisfaction in the real options from which to choose, options which will be appropriate
marketplace has pointed out: “. . . the buyer may consider complaining
as unpleasant, he may not be sure how strong a case he has, or the time for the particular form which their grievance takes.
and inconvenience may be significant. Especially in the case of low fre The areas in which such action is necessary and possible are
quency items in which his experience is limited, he may question whether
the product really performed less well than competing products. For already visible, and some experimentation along these lines is already
these various reasons, the complaints which are actually made may be going on. Let me sketch out for you some of these proposals and
only the tip of the iceberg and the unregistered complaints may lead to programs so that their potential and significance can be evaluated.
an undercurrent of consumer grumbling.” Unpublished manuscript by
Richard Holton, Dean, University of California, Berkeley.
238 THE ARBITRATION JOURNAL SOLVING CONSUMER GRIEVANCES 239

II claim s .3 H ow ever, in these situations offending m erchants are left

E x is tin g a n d P o t e n t ia l M e c h a n is m s t o E lim in a te quite free to continue their illegal practices against less litigious
a n d R e s o lv e C o n s u m e r G r ie v a n c e s clients. M oreover, the individual lawsuit is n o t the m ost efficient
vehicle to grapple w ith m any business practices w hich, though il
Looking at the existing legal system, there is little doubt that legal, m ay n o t give rise to individual causes of action. Lawyers should
access for consumers to our legal system can be improved by such p u t their w eight behind the establishm ent of governm ental consumer
proposals as the recently revised class action provisions of the Con protection agencies in those states w here they do n o t yet exist. T hey
sumer Protection bill pending with the Senate Commerce Committee.* 2
should press for the enactm ent of legislation w hich confers on these
Increased legal aid programs, amendments in procedural rules af agencies powers to impose effective sanctions against offending m er
fecting service of process and default judgments, and proposals now chants and to be able to exact redress for individual consumers af
being considered by the National Commission on Consumer Finance fected by these practices in the form of restitution, rescission, and
to limit the invocation of creditor remedies in consumer credit transac the like .4
tions can also go a long way towards eliminating some of the obstacles
to consumers’ access to our court system as well as correcting some
The N eed to C re a te In fo r m a l C o m p la in t - H a n d lin g M e c h a n is m s
of the abuses of court procedures. These are all essential steps which
should be pressed by lawyers—and indeed by all persons, in both the W hile vigorous governm ental action against acts an d practices
public and the private sectors—who are concerned with protecting w hich victimize consumers an d greater facilitation of consumers’ ac
the interests of consumers and eliminating injustice. cess to the courts are im p o rtant in order to ensure m axim um protec
Lawyers concerned with consumer problems must also concern tion for consumers against violation of th eir rights, nevertheless, in
themselves with strengthening the potentiality of government action the long ru n the broad spectrum of consum er grievances an d frustra
as one of the central tools available to protect the long-range interests tions will never be adequately dealt w ith unless new grievance-han
of their clients. Time and time again at the Federal Trade Commis dling mechanism s can be created to supplem ent these m ore traditional
sion’s National Consumer Protection Hearings, which it held in late and form al channels.
1968, consumer advocate witnesses testified to the need for strong
effective government programs directed to eliminating the illegal 3. E.g., FTC National Consumer Protection Hearings pp. 126-133 (1968)
practices victimizing consumers. These witnesses pointed out that (testimony of Michael D. Padnos, Director, Atlanta (Ga.) Legal Aid Agen
cy). Only one witness took a contrary view and urged the abolition of
relatively few aggrieved consumers in fact seek legal counsel. More the FTC on the ground that its mere existence acted as a palliative on
over, counsel representing consumers in these situations must be con more aggressive state or local action. Testimony of Jonathan Weiss,
cerned exclusively with the interests of their individual clients which Mobilization for Youth Legal Services Unit, New York City, ibid., p.
310. My own experience does not bear out this pessimism. The more
frequently compel them to accept out-of-court settlements of their vigorously the FTC acts, the more incentive there is for the establishment
of similar agencies on the state and local level as the effectiveness of this
2. See S. 3201, 91st Congress, 2d Session (Commerce Committee Print No. approach becomes more evident. Moreover, the more agencies exist
2, June 22, 1970). A consumer class action may be commenced at any with powers to protect consumer interests, will they act as a deterrent
time provided the facts giving rise to the suit are alleged to constitute on the commission of these practices, provided these agencies act with
unfair or deceptive acts or practices in violation of the Federal Trade vigor and have effective sanctions.
Commission Act, and that each member of the class has paid or become 4. Some state and local authorities already have such powers. See FTC News
liable for more than $5.00 as a result of the violation upon which the Release of August 13, 1969. The Commission has recently asserted the
suit is based (§207 (b) (1). In addition, Section 201 of the bill enu power to obtain individual redress for consumers injured by the practices
merates a number of the most common unfair consumer practices, for proceeded against in the Commission’s proceedings when the facts support
which individual consumers claiming injury may bring suit for damages the appropriateness of the remedy. See Curtis Publishing Co., Docket
once either the Commission or the Department of Justice has obtained No. 8800, 3 CCH Trade Reg. Rep. 1118,798 (complaint issued October 13,
a final cease and desist order (§207 (a) ). In both individual and class 1969) (order requiring Curtis to make refunds to subscribers of defunct
actions in which the plaintiff (consumer) prevails, the bill provides for magazine); London Credit and Discount Corp., Docket No. 8812, 3
the judgment to include the costs of suit, including attorney’s fees CCH Trade Reg. Rep. 119,195 (complaint issued March 30, 1970) (order
(§207 (c) ). requires repayment of monies collected on behalf of creditors by respon-
 SOLVING CONSUMER GRIEVANCES 241
240 THE ARBITRATION JOURNAL

policies in the hands of the head of the department where the

We must explore and develop a variety of complaint-handling
product was purchased. However, the head of that department as
and dispute-solving techniques in both the private and public sector
well as the sales personnel may depend for their promotion or com
if adequate buyers’ remedies are to become a reality for all consumers
pensation on that department’s volume of sales or general efficiency
regardless of their educational or financial resources. The needs are
of performance. Inordinate returns could obviously constitute a serious
twofold: to develop effective complaint-handling techniques and to
blot on that department’s record, raise questions as to its sales tech
establish easily accessible grievance-solving bodies. Experience in this
niques and otherwise embarrass the department’s performance. Thus
area is sparse but at least suggestive of some of the directions which
again, businesses have built into the implementation of their con
lawyers can point towards in their efforts to meet the needs of their
sumer complaint-handling policies, a basic inconsistency which can
clients in this important area of consumer dissatisfaction and frus
preclude the type of courteous, respectful and generous treatment of
trations.
consumers which their customer relations policies are designed to
Industry has begun to take more serious notice of what has be
achieve.
come in too many instances at best a serious malfunctioning, and at
Since satisfaction of consumer grievances, particularly those based
worst a total breakdown of their existing complaint-handling techni
on non-delivery or some other breakdown in expected performance
ques. Too often individual firms have staffed their complaint depart
short of fraud or other illegality, must ultimately come in most cases
ments with personnel whose primary function seems to be to protect
from the business firm itself, there is obviously an important need
the store and convince the consumer that in fact no basis exists for
on the part of business to re-examine and make realistic its own com
their complaint. Many firms do have policies to placate the insistent
plaint-handling procedures. Some estimates suggest that perhaps
consumer regardless of the merits of the claim. However, these policies
as high as 80% of the non-fraud, illegal-type complaints of consumers
more often than not tend to favor the aggressive and, in some in
could be satisfactorily adjusted if in fact consumers could be en
stances, the dishonest consumer at the expense of the more timid,
couraged to bring their complaints directly to the attention of the
less confident consumer. Moreover, because the same complaint per
company involved and if the company involved really took seriously
sonnel handle the meritorious as well as the “goodwill” consumer
the need to treat these complaints with respect and courtesy. To
complaint problems, they have a tendency too often and quite under
achieve this objective, it is essential that complaint-handling respon
standably, to become cynical about their claims-handling duties and
sibility be assigned to personnel whose sole obligation is to seek a
to generalize about the dishonesty of all claims presented. As a result,
solution which would be fair to both the customers and the company.
recourse to these complaint departments can become a virtual ad
versary process in which only the most forceful and aggressive—in Complaint departments who see their job primarily as an attempt to
cluding the consciously dishonest—consumer gets any satisfaction. defend their employers cannot fulfill this function. Unfortunately,
It is the usual practice of many large retailers to place respon the response of the business community to this need can best be de
sibility for implementing their company’s liberal return or refund scribed as embryonic.
The United States Chamber of Commerce’s perceptive report of
its Council on Trends and Perspectives entitled ”Business and the
d e n t); Universal Credit Acceptance Corp., File No. 682 3474, 3 CCH
Trade Reg. Rep. II (intention to issue complaint announced July , Consumer—A Program For the Seventies,1’ contained only a passing
1970); Windsor Distributing Co., Docket No. 8773, 3 CCH Trade Reg. reference to this problem with its recommendation that business
Rep. 1119,157 [Commission order], 1118,999 [Initial Decision] (appeal should recast the Better Business Bureaus as “a consumer ombuds
pending, 3rd Cir.) (both orders require restitution of monies paid by
franchisees to franchisor and the former proposed order includes reim man to coordinate and strengthen manufacturer-seller-customer com
bursement for out-of-pocket travel expenses of prospective franchisees as plaint, information and warranty, performance communications sys
a result of alleged deceptions). However, the Commission’s powers in tems.” Individual Better Business Bureaus are already starting to in
this respect are as yet untested in court. Amendments to S. 3201, now
pending before the Senate Commerce Committee, would confer express crease their activities along these lines. A few companies have sought
powers on the Commission to award damages, grant restitution, rescission, to meet the problem by establishing direct telephonic communication
reformation or other appropriate relief to injured consumers when neces channels from their customers to responsible personnel in company
sary to return them to their former condition.
 SOLVING CONSUMER GRIEVANCES 243
242 THE ARBITRATION JOURNAL

which provide models of one type of approach to this problem. An

headquarters so that at least the complaints can be received. The
example of such a mechanism is the Neighborhood Consumer In
primitiveness of the technique suggests how complete the consumer-
formation Center established in the low-income communities in the
business communication breakdown has become. District of Columbia. The Center has three specialized departments.
Some individual industries have moved more directly to im The Field Department is divided into three divisions: The Consumer
prove their complaint-handling procedures. One of the first to do Complaints Division which attempts to negotiate a remedy between
so was the American Home and Gas Appliance Industry which re buyer and seller where fraud, misrepresentation, and unfair credit
cently established through their associations a joint program designed practices are concerned; the Store Investigation Division which, fol
to ensure that complaints by their customers would in fact be dealt lowing a complaint, obtains data relating to sales, credit, and other
with by responsible company personnel. The program also envisages practices which might be employed; and the Education Division
a hearing procedure for those grievances not dealt with satisfactorily which conducts consumer education classes within the community. It
by this individual company although this aspect of the program ap also includes an individual counsel mechanism through block coun
pears to be definitely subsidiary to the program’s major thrust to selors. An interesting feature of the Neighborhood Consumer Informa
improve individual company complaint-handling procedures. More tion Center’s recent work is its agreement with the American Arbi
recently, the electronic industry has set up a complaint-handling tration Association’s National Center for Dispute Settlement under
procedure with even less formal provisions for resolution of consumer which complaints which cannot be resolved through the Information
complaints which cannot be satisfied by the individual company. Center’s mediation procedures will be referred to the Community Dis
Both the President’s Special Assistant for Consumers and, more pute Center for arbitration. The clout which influences merchants to
recently, the Federal Trade Commission have been directing con agree to arbitration is their realization that grievances which are not
sumer complaints which they receive to the attention of the com satisfied will in all likelihood be referred to the neighborhood legal
panies involved. Business has apparently welcomed these moves but one service attorneys in the district.
can only speculate whether their reaction is influenced primarily by
Another grievance-solving model is the road taken by some
their hope that this will discourage further action by the government
Scandinavian countries in creating government funded joint indus
agency involved.
try-consumer complaint boards to mediate and determine consumer
The legal profession can certainly do much to encourage the
disputes arising in particular industries. When mediation proves
creation of effective complaint-handling procedures and channels by
successful, the boards make their determinations on the basis of es
the business community as an essential first step of the most elemental
sentially simplified procedures which can involve an examination of
nature towards improving the communications between the consumer
the product in question, where appropriate, and the information fur
and his seller.
nished by the parties detailing the transaction and the nature of the
It must be recognized, however, that consumer injustices suf
claim and the defense. While their only sanction is the publicity
fered in the marketplace—stemming both from the honest difference
which will be accorded to unsatisfied awards, they nevertheless have
of opinion as well as from the outright dishonest practice or the cul
received considerable acceptance and cooperation from the business
pable indifference to consumer satisfaction—will not be eliminated
community. Estimates of results of the Swedish complaint boards in
through mere improvement in complaint-handling procedures. Con
dicates that in a three year period some 1,000 complaints were heard.
sumer complaints will never be treated with the respect to which they
Approximately 50 percent of these cases were decided in the con
are entitled unless there also exists an effective third party, grievance
sumer’s favor and awards were complied with in approximately 60
solving mechanism to which the parties can resort in the event their
percent of the cases. In Denmark, the ten year experience of the
own negotiations come to naught. Hence, major attention must be
board created to hear dry-cleaning claims resulted in settlement of
directed to creating grievance-resolving mechanisms embracing con
4,500 cases. The Danish board created to hear laundry complaints
ciliation, mediation, arbitration and any other type of informal hear
handled approximately 668 cases during its first six years of existence.
ing techniques which respond to the particular needs of consumers
The goal of these boards is to dispose of the complaint as quickly
in terms of credibility, simplicity and convenience of access.
as possible. Sweden’s target is 2% months. Appeals are not provided for.
Several community-type grievance-solving programs exist today
 SOLVING CONSUMER GRIEVANCES 245
244 THE ARBITRATION JOURNAL

of third p arty grievance m echanism by m erchants found by it to

Certainly it would be possible to authorize Federal Trade Com
have engaged in w idespread consum er deception . 56 Presumably, small
mission hearing examiners to provide this type of service to consumers
claims courts could be revitalized to offer this type of inform al griev
and businesses who find themselves unavailable to resolve their own
ance-solving functions , 6 or as has been suggested, a new system of
grievances. Recourse to hearing examiners would provide a simple
consum er courts could be created w ith pow er to m ediate an d resolve
cost-free mechanism which offers considerable potential to resolve a
disputes of any kin d arising betw een consumers an d their sellers.7
substantial number of disputes on a quick and informed basis.
H ow ever established, o r by whom , these consum er grievance
A more formalized approach to the problem would be to pro
solving m echanism s m ust have certain basic requisites if they are to
vide for arbitration of consumer grievances. The National Center
achieve their essential objective of providing consumers w ith a bona
for Dispute Settlement was created by the American Arbitration Asso
fide th ird party grievance-resolving forum w ith adequate powers an d
ciation for the express purpose of providing this type of mediation
unim peachable credibility.
and arbitration service for the resolution of community disputes
First, the b o ard m ust be readily accessible to consumers in their
including consumer problems. To date, it has had only limited suc
own com munities, ideally, directly in the same shopping center or
cess in applying its procedures to consumer transactions. It has en
area w here the transaction was consum m ated so th at consumers’ ac
tered into a working arrangement with the District of Columbia’s
cess to th e board is as easy as their access to the stores in w hich the
Neighborhood Consumer Information Center to handle grievances
transactions giving rise to the claim took place.
which come to the Center’s attention. It is also currently negotiating
Second, the m em bership of the board, w hether a single individ
with retailers in Philadelphia to provide arbitration services to con
ual or a panel, m ust be draw n from unim peachable sources, an d con
sumers who are unable to resolve retailing claims. However, its efforts
sumers, either individually or through their organizations, m ust have
in the consumer field are of too recent origin to enable any conclusions
some role in the selection of the board ’s m akeup— either a t the time
to be drawn as to the efficacy of this approach to consumer complaints.
of the constitution of the board to h ear the consum er’s com plaint,
Two Better Business Bureaus, one in Los Angeles and more re or w hen the initial panel, from whose m em bership p articu lar h ear
cently, one in South Florida, are experimenting with the establish ing officers are to be selected, is appointed o r designated.
ment of arbitration panels consisting of both business and consumer Third, th e procedures of the board m ust rem ain simple and
representatives to hear consumer disputes. In Los Angeles, one such inform al an d attorneys p erm itted only if b oth sides to the dispute
panel has been created for disputes involving dry-cleaning and laundry are so represented. Consumers, however, if they desire, m ust be per
establishments. Some 340 cleaner-laundry firms participate in this m itted to app ear through spokesmen of their choice in o rd er to com
program and their membership in the Bureau is conditioned on their pensate them for their n atu ral inarticulateness and lack of sophistica
agreement to arbitrate consumer claims which are not otherwise tion in the ways of argum entation. M oreover, attorneys m ust be avail
resolved. In the year in which this program has been operating, some able to consumers for this purpose.
372 cases have been handled. The customer complaint prevailed in
285 cases, 12 cases were unresolved, and 75 cases were decided against
the customer. Another board is being set up for complaints about 5. A recent decision by a state court in Seattle found a carpet merchant to
TV repair services by the Los Angeles BBB, undoubtedly stimulated have engaged in fraudulent sales practices and ordered the defendant to
make restitution to his injured customers. The court took one additional
by the state licensing statute for television repair firms. The South and important step. It required the defendant to submit to arbitration all
Florida experiment has only just been launched and, therefore, no claims submitted under the court decree which he refused to settle and
data exists yet on its experience. It is designed to tackle all consumer provided that the major share of costs of the arbitration were to be
paid by the merchant. State of Washington v. Cohen, No. 713326 (King
complaints referred to the Bureau which its trade practice committee Co. Superior Ct., order entered January 2, 1970).
has not been able to resolve through mediation. 6. Such a revitalization has apparently occurred in a California small claims
Industry could certainly establish such grievance-solving mech court run by Judge Katsufrakis in Los Angeles. As a result of his efforts,
the traditional use of these small claims courts as collection agencies for
anisms on its own. They could also be created by legislation or creditors has fallen off sharply in Judge Katsufrakis’s court. “California
ordinance. Consumers’ organizations could set them up. The Federal Judge Helps Consumers,” Washington Post, June 15, 1970.
Trade Commission might even be able to require resort to some type 7. FTC, National Consumer Protection Hearings, TR. pp. 102, 104.
 SOLVING CONSUMER GRIEVANCES 247
246 THE ARBITRATION JOURNAL

There seems to be little effort, especially by consumer groups,

Fourth, whatever method of financing the operation of these
to create or even press for informal grievance-solving mechanisms for
boards is agreed upon, it must not be based solely on contributions
consumers who cannot get even an acknowledgement, much less
or fees from the individual parties to the dispute since this would
prompt satisfaction, for their various marketplace problems. The need
work unfairly on the individual consumer. Since the existence of
is clear and urgent. Speaking of the impact on society of the indi
the hearing board, as does any legal system, can be expected to work
vidual’s sense of powerlessness and of the relationship of that sense
to the advantage of all consumers, irrespective of whether or not
o f powerlessness to the increasing incidence of civil tumult in our
they have occasion to resort to it, as well as to the entire business
nation today, John Gardner pointed out that this civil tumult
community, some financing method must be worked out which will
spread the cost throughout the consuming public and business com . . . stems, at least in part, from people who want to have their
munity. This could be done by requiring business to fund it and say and feel that they have not been listened to, who feel that
inevitably passing on some part of this cost to their customers, by they have suffered injustice and have been denied redress, and
a combination of consumer and individual business subscriptions thus who feel that in matters of self-government they have been lulled
confining its cost to actual beneficiaries and relying on its success with rhetoric and denied effective power. The solution lies in
giving them outlets within the system, that is, in providing them
to broaden its subscriber base. Or it could be assisted through gov
constructive paths of action. (John Gardner in his undelivered
ernment or other outside funding at least on a matching or percent address to the Illinois Constitutional Convention, May 1970.)
age basis.
Fifth, its decisions must be capable of enforcement—not review— Lawyers must devote their considerable talents to this problem
both through the pressure of publicity as well as through recourse to if our society is to be able to fulfill its most fundamental obligations
the court with the cost of this borne by the party refusing to com to its citizens. It is my fervent hope that we can and will respond to
ply with the award. The Court’s only function will be to enforce the this challenge.
award and assess the costs.
Sixth, the availability of the grievance machinery must be fully
and continually publicized in all the media so that consumers are
well aware of its existence and of the steps which they can take in
order to invoke its powers. This fact alone could go a long way to
resolving one of the major problems confronting consumers today—
this deeply felt sense of their own powerlessness.
Both the President and the United States Congress have rec
ognized the need and importance of finding ways to resolve consumer
complaints in the marketplace. 8 Yet the need for the creation of
informal grievance-solving mechanisms has gained far too little rec
ognition among either business or consumer groups.
9. The bulk of the consumer witnesses at the Commission’s National Con
8. President Nixon in his consumer message to the Congress outlining his
sumer Protection Hearings appeared to be chiefly concerned with in
legislative program in October 1969 pointed out that the buyer has the
adequacies and deficiencies of our traditional legal institutions and with
right to register his dissatisfaction, and have his complaint heard and
proposals to remedy these deficiencies. Some witnesses did propose the
weighed, when his interests are badly served. Section 11 of S. 3074, 91st
use of arbitration as a compulsory requirement for the resolution of
Congress, 2d Session, a bill to provide minimum disclosure standards for
claims arising out of retail installment credit contracts (TR. 103, 104).
warranties and guarantees, provides that it is the express policy of Con
Several witnesses suggested the establishment of consumer counsels,
gress “to encourage warrantors to establish procedures whereby consumer
analagous to public defenders, whose sole job would be to solicit con
disputes are fairly and expeditiously settled through informal dispute set
sumer complaints and bring cases on behalf of consumers wherever legal
tlement mechanisms. Such informal dispute settlement procedures should
action was warranted (S-12-2-5). Indeed, only a few consumer organiza
be created by suppliers in cooperation with independent and govern
tions offer counseling and mediation services to consumers with market
mental entities and should be supervised by some governmental or other
place grievances (e.g., TR. 136, 138, 269-70, 305).
impartial body.”
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