WASHINGTON, May 22, 1999 -- The right to seek redress in the courts is every American's birthright, but it is being signed away everyday by consumers too busy to notice.

Tired of having to defend themselves in court, banks, car dealers, computer firms, credit card companies and others are inserting clauses in their service agreements and contracts that prohibit their customers from suing or even participating in class-action lawsuits.  Instead, consumers agree to use arbitration or mediation, a process under which they give up their right to trial by jury and the strict rules of discovery and procedure that protect the rights of both sides in a court proceeding.

American Express adopted just such language in a bland-looking modification of its basic agreement mailed to cardholders in June.   Gateway 2000 puts its arbitration provision in a pamphlet that is usually inserted in the packing material when a computer is shipped.  First USA Bank has a mediation clause in its agreements with 58 million cardholders.

The corporations argue that mediation saves time and money.  But consumer advocates and attorneys the savings are one-sided.   Mediation often costs the customer more money, since it is not possible to find a lawyer willing to work on contingency, and it is generally much harder for customers to win in a mediation than in a trial.

Experts say mediation works best when both parties are roughly equal -- between two large companies, for example, or two individuals.  But when one side is a huge corporation and the other is an individual, the procedure can break down.

In traditional consumer cases, plaintiffs with a strong case are usually able to find a lawyer to handle it on a contingency basis, so that there is virtually no upfront cost.  But arbitration often requires a deposit and both sides must split the cost of the arbitrator, who can charge as much as $1,000 a day.

Various federal agencies are studying the issue to see if additional regulation is needed and there are various cases pending in the courts that may establish a precedent one way or the other.

Until then, the only recourse open to consumers is to be vigilant about giving up their right to sue.

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