Firm-Wide blog

Experts Prove Forced Arbitration Unfairly Deprives Consumers’Rights

By Burg Simpson
February 18, 2015
2 min read

Alternative dispute resolution (ADR), and specifically arbitration, can be wonderful tools to resolve disputes without having to resort to lengthy and expensive court battles. Notwithstanding ADR’s indisputable advantages in certain areas, consumer advocates have long decried the use of forced arbitration provisions that require individuals to waive their right to legal recourse in the judicial system. Specifically, terms that force consumers, employees, and other individuals to forego their right to sue, participate in class actions, or appeal are frequently found in contracts that individuals have little choice in signing. In such contracts, the outcome of the forced arbitration is binding, leaving dissatisfied parties without their fair day in court.

What is the cost of forced arbitration?

Frequently, forced arbitration provisions are found in the following types of agreements:

  • Employment contracts
  • Credit card documents
  • Insurance contracts
  • Home-building contracts
  • Investment accounts

In many instances, the terms that ostensibly bind an individual to arbitrate disputes are buried in the fine print. While arbitration may be advantageous in a variety of circumstances, companies generally try to force arbitration on parties to gain the upper hand and decrease or even eliminate legal accountability for wrongs they may commit.

Arbitration without consent?

While consumer advocates have argued against forced arbitration for years, a new study published by a team of law professors from St. John’s University demonstrates the extent to which arbitration is unfair to consumers. According to this study, arbitration clauses remove the very constitutional rights that our nation’s forefathers were determined to establish. Specifically, arbitration clauses often eliminate the right to a jury trial, referenced in no less important a source that the Declaration of Independence, in addition to the right to one’s day in court.

The authors of the study argue that if Americans are prepared to give up such rights, they should be adequately advised and should consent. The reality, however, is that many forced arbitration clauses are written in a way that consumers are not even aware they have signed away their rights. Without knowing and voluntary consent, arbitration may continue to deprive consumers of the right to pursue justice and secure the damages they deserve.

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