AT&T is denying that its contracts include "forced arbitration" clauses, even though customers must agree to the clauses in order to obtain Internet or TV service.

"At the outset, no AT&T customer is ever 'forced' to agree to arbitration," AT&T Executive VP Tim McKone wrote in a letter to US senators today. "Customers accept their contracts with AT&T freely and voluntarily; no one 'forces' them to obtain AT&T wireless service, DirecTV programming, or other products and services."

AT&T was responding to concerns raised by Sens. Al Franken (D-Minn.), Richard Blumenthal (D-Conn.), Ron Wyden (D-Ore.), Patrick Leahy (D-Vt.), and Edward Markey (D-Mass.), who previously alleged that AT&T's use of forced arbitration clauses has helped the company charge higher prices than the ones it advertises to customers.

While AT&T is correct that no one is forced to sign up for AT&T service, there are numerous areas of the country where AT&T is the only viable option for wired home Internet service. Even in wireless, where there's more competition, AT&T rivals Verizon and Sprint use mandatory arbitration clauses, so signing up with another carrier won't necessarily let customers avoid arbitration. One exception is T-Mobile, which offers a way to opt out of arbitration.

The terms of service for AT&T Internet and DirecTV require customers to "agree to arbitrate all disputes and claims" against AT&T. Class actions and trials by jury are prohibited, although individual cases in small claims courts are allowed. AT&T doesn't offer any way to opt out of the arbitration/small claims provision, so the only other option is not buying service from AT&T. By contrast, some home Internet and TV providers such as Comcast offer a method for opting out.

Senator: It’s still forced arbitration

Franken was not convinced by AT&T's response. In a statement provided to Ars, he continued using the phrase "forced arbitration" to describe the AT&T customer contract clause. AT&T claimed that its arbitration clause is "customer-friendly," but Franken said, "There’s nothing ‘friendly’ about AT&T’s take-it-or-leave-it contracts that eliminate consumer choice and take away Americans’ ability to resolve legal disputes with their telecom provider in a court of law. Further, forced arbitration agreements that prohibit customers from banding together as a class deter consumers from seeking justice and allow widespread wrongdoing by powerful corporations to go unchecked."

An arbitration clause can only truly be customer-friendly if it "is entered into voluntarily after a dispute has arisen—and after a customer has fully considered their options—to ensure that Americans are not deprived of their constitutional rights," Franken said.

The Democratic senators wrote to AT&T three weeks ago after a CBS News investigation that described "more than 4,000 complaints against AT&T and [subsidiary] DirecTV related to deals, promotions and overcharging in the past two years."

412 arbitration cases for AT&T since 2015

AT&T said in its letter that "the CBS story has it wrong" because "AT&T is fully committed to honoring its deals, offers, and promotions."

Customer complaints about not receiving the correct promotional prices are "rare," AT&T said. "For example, during 2015, 2016, and through the ﬁrst four months of 2017, on average approximately 0.03 percent (i.e. 3 out of 10,000) of new DirecTV, U-verse and Mobility customers lodged complaints alleging overcharges related to promotions with AT&T’s dedicated customer complaint resolution teams," AT&T said.

There have been 412 arbitration cases with AT&T customers since the start of 2015, and most were settled before a hearing, the company told the senators. AT&T said it "has a very strong incentive to provide settlements satisfactory to the customer" because AT&T pays customers' arbitration fees and at least $10,000 to "customers who win more in arbitration than AT&T’s last written settlement offer."

"The relatively small number of cases that actually reach an arbitration hearing therefore does not provide any evidence that the dispute resolution process is not fair or is not used," AT&T said. "To the contrary, it demonstrates that the process is working just as intended—satisfactorily resolving consumer claims without the need to initiate an arbitration."

Franken recently proposed Senate legislation that would invalidate mandatory arbitration clauses. But he didn't say if he plans to take any further action at the moment.