Forced Arbitration Clauses
More and more businesses are forcing their customers to agree to forced arbitration clauses in the event that a dispute develops between the customer and the business. The businesses try to justify it by saying it saves the customers money.
Businesses are not forcing their customers into forced arbitration to help the customer. They are doing this purely for their own economic benefit. Typically, businesses require the customer to use one particular arbitration firm. This means that the arbitration firm has gotten used to being paid by the company, so their arbitrators know that if they rule against the company too often, then they will lose the business. This conflict of interest doesn’t tend to promote just results.
The forced arbitration clauses also require the consumer to waive class actions. This is especially significant for consumer service companies. Let’s assume you have a cable TV contract with Directv. They have a forced arbitration clause, which forbids class actions. Lets further assume that you receive no cable service for one month, which is worth $130.00 and Directv refuses to refund your money or give you credit. If this service refusal was widespread, then a class action suit can be brought against the company which you can participate in for little or no upfront money. However, since you have a forced arbitration clause which bans class actions, then you have to pay $125.00 just to file the arbitration action and pay a lawyer, Once again, it is easy to see who makes out in this scenario.
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Posted on Thu, March 30, 2017
by Thomas Tobin III