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Do Forced Arbitration Clauses Limit Access to Justice?

A growing number of businesses and corporations are turning to arbitration clauses to shield themselves from liability. These clauses are usually hidden deep within consumer or employment contracts, including job offers, cell phone or cable service agreements, and even nursing home contracts. Unfortunately, many people who sign these contracts remain unaware they have forfeited their legal rights until it is too late.

If a consumer ever has a dispute with a corporation, such as a dispute over excessive charges or a discrimination or harassment claim, arbitration clauses stipulate that the consumer cannot take the matter to court. Instead, they must take their complaint to an arbitration forum created by the same corporation they had the dispute with in the first place.

How Are Consumers Harmed by the Fine Print?

Forced arbitration is designed to favor corporations, making it difficult for the public to hold them accountable for unethical or illegal business practices. In a sense, corporations are getting away with bad behavior unchecked by preventing anyone from challenging them.

The fine print of forced arbitration is hurting Americans in a number of ways:

  • High costs. Often, the price of arbitration is more than the amount a consumer would recover if the case were successful.
  • Weak safeguards for civil justice. Arbitration clauses restrict a person’s ability to argue their side of a case. In addition, it is nearly impossible to appeal the decision of an arbitrator.
  • One-sided requirements. Corporations reserve the right to take a matter to court, but consumers are forced to waive their rights to litigation.
  • Biased decision makers. Arbitrators benefit from the businesses that retain them. Thus, there is a disincentive for them to rule against the company that hired them if they want to continue being retained in the future.
  • Secret proceedings. Even if a case involves serious safety or public health concerns, all arbitration is kept confidential. This is unlike other law proceedings and court records, which are open to the public.

The New York Times recently published an investigative series on forced arbitration clauses. Click on the links below to read more.