What Is Forced Arbitration And What Does It Do?

Forced arbitration is an alternative dispute resolution (ADR) tactic created by corporations in order to stay out of court when they have a dispute with a consumer.  What arbitration does is not allow the consumer to file a lawsuit and instead requires them, contractually, to attend a private arbitration forum designed by the very corporation the dispute is against.  There are typically three “neutral” arbitration judges who will hear all the evidence in the case and then make a decision based on that evidence.  However, these “neutral” judges are selected by the corporation in dispute with the consumer!  Below is a list of other factors about forced arbitration that hurt consumers:

  1. Biased arbitration judges – the corporations are the only parties that use arbitration.  There is a disincentive for an arbitrator to rule in favor of a consumer if he expects to be hired again.
  2. Confidentiality – most arbitration proceedings are kept confidential, unlike a civil lawsuit.  The wrongs committed by the corporation are never open to the public.
  3. They are usually final – arbitrations are usually non-appealable.
  4. One sided requirements – because the corporations draft the agreement, they often require the consumer to waive their rights while they often retain the right to bring a lawsuit against the consumer.
  5. Costs – consumers are often required to pay large filing fees, split the costs of the arbitrators and travel to where the corporation would like the arbitration to be held.

Consumers beware; forced arbitration clauses are everywhere.  Consumer watch groups have been fighting these types of clauses for years, but they need help.  Clauses such as these are dangerous and hurt consumers.

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