Mandatory Arbitration Clauses Not Prohibited in FCC Privacy Order

Clyburn had pushed for inclusion but chairman plans action on issue by February

In a victory for ISPs, the broadband privacy item the FCC adopted Thursday does not prohibit mandatory arbitration clauses. However, it may be only a temporary reprieve.

Those are clauses that require subs to go through arbitration of any disputes with ISPs—in this case including over the improper sharing of data or breach-related issues—rather than being able to file class action suits.

The arbitration clause prohibition was pushed by FCC commissioner Mignon Clyburn, and it was in discussions to be included, according to FCC sources, but did not make the cut, much to Clyburn's chagrin. She spent a good portion of time in her public statement talking about the clauses and pointed out she had a pledge from the chairman to take it up in a separate proceeding.

Due to the absence of that provision, Clyburn concurred in part to the order, which was her way of signaling that displeasure.

"Several agencies have stepped up and declared these provisions unlawful in other contexts, and yes, I am disappointed that we did not join this vanguard, in ensuring that consumers are not unwittingly giving up their day in court, when they sign up for communications services. And because of this, I respectfully concur in part. Nonetheless, I am heartened, Mr. Chairman, that we are committed to addressing this issue, in a separate proceeding, with a firm timeline."

In his meeting statement, Wheeler said it was time to deal with the harmful effect of those contracts. He said an "internal process" has begun to produce a notice of proposed rulemaking on the issue no later than February 2017.

Asked at a press conference following the meeting whether that meant the chairman planned to still be there in February, he said his departure was up to the new Administration.

USTelecom was not happy with the signal that the FCC was taking a deep dive on the contracts and expecting to come up with a rulemaking proposal.

"Chairman Wheeler’s commitment to pursue a proceeding to consider a ban on mandatory arbitration clauses in service contracts threatens to do a disservice to consumers who seek speedy resolutions to problems that may arise, and goes well beyond the agency’s statutory mandate," said USTelecom President Wlater McCormick. "Fully harmonizing privacy rules around the tested and successful FTC approach would best serve the future of an internet responsive to consumer expectations.”