January 1, 1970 · FLEMING | NOLEN | JEZ, L.L.P.
Smart phones. Computers. Software. These are just a few examples of products that require consumers to agree to arbitration clauses. Millions of Americans own products or have agreed to services that often have placed arbitration clauses in the fine print of the user agreements. An arbitration clause requires the parties settle disputes in an arbitration, rather than judicial, setting. Almost all jurisdictions across the country enforce arbitration clauses as binding and enforceable.
Binding arbitration often means that “any dispute, controversy, or claim” arising out of the use of a product must be submitted to arbitration. The problem is, arbitration (most of the time) inherently favors industry over consumers. The average consumer does not know the mechanics, nuances, and procedures of arbitration. Often, arbitrators must be paid thousands of dollars to hear a case, even though the actual dispute may be worth far less. Thus, it is often completely uneconomical for a consumer to go through the arbitration process. Moreover, the loser often has to pay considerable costs in an arbitration proceeding, including but not limited to the other side’s attorney’s fees.
Additionally, arbitration clauses have grown more sophisticated over time. While the actual language of arbitration clauses varies, the standard language now disallows any type of class action proceeding through arbitration. This specific clause discourages lawyers from taking claims that must go through the arbitration process.
At the end of the day, forced arbitration clauses hurts consumers. Product agreements often have “take it or leave it” terms that have little to no room for negotiation. Congress has yet to pass the proposed Arbitration Fairness Act which has been introduced in 2007, 2009, and 2013. Until this law passes, more and more cases that should be heard in the courtroom will instead never see the light of day due to the considerable risk, challenges, and burden of litigating through arbitration.