forced arbitration

Popular Uses of Forced Arbitration and Companies that Use it

Recent legislation and protests have brought media and legal attention to the topic of forced arbitration. The troubling issue is that many companies are including clauses in their intimidatingly long contracts which state that any complaints from consumers must be settled through arbitration, rather than in court. Arbitration exists as an alternative to a civil claim brought through a state or federal court, in order to lighten the load faced by the legal system. However, when customers have no choice in how to pursue claims, they are denied their Seventh Amendment right to a trial by jury for civil matters.

Forced arbitration clauses box consumers into a set option for pursuing a complaint. Typically, the ability to seek compensation in Court is denied, and if an issue arises between multiple customers, they must settle claims through arbitration individually. Class action suits are not an option, even if it is clearly more feasible to do so. This is a huge concern for consumers, as many issues, such as a defective product, could affect thousands of customers. These individuals would have to seek compensation separately, keeping many from receiving the compensation that they would be entitled to.

Forced arbitration clauses limit individuals when pursuing claims for issues such as:

  • Defective products
  • False advertising
  • Dishonest business or billing practices
  • Employee misclassification
  • Denial of rightful wages

However, the reverse usually does not apply. If the company has reason to seek compensation from a consumer, they are still able to take them to court if they choose. These unbalanced limitations have come under scrutiny from groups such as the National Association of Consumer Advocates.

Companies across a wide range of fields and services have adopted versions of forced arbitration clauses into their contracts and terms of service. Some of the areas which most commonly employ forced arbitration are:

  • Cable and Internet Providers: Companies such as DirectTV, Verizon, Comcast, Clearwire, and Time Warner Cable all include forms of forced arbitration clauses in their contracts, preventing consumers from filing suit over inflated bills and other concerns.
  • Phone Service Providers: AT&T, Sprint, T-Mobile, and Tracfone force consumers into arbitration through clauses in their massive contracts.
  • Banking and Credit: It may seem unusual to file suit against a bank, but Wells Fargo, US Bank, Regions, Discover, Chase, American Express force their customers into arbitration for concerns such as errors in handling funds.
  • Electronics and Gaming: Sony, Dell, Toshiba, Gateway, Electronic Arts, Xbox Live, and Microsoft prevent customers from filing a claim in court for defective products and other issues.
  • Nursing Homes: If a loved one is placed in the care of a nursing home such as Carrington Place, Covenant Dove, Driftwood, Kindred Nursing Center, or OP Winter Haven, forced arbitration clauses will keep family members from seeking compensation in court if any abuse occurs.
  • Home Builders: Lennar, Centex, KB Home, D.R. Horton, NVR, Ryland Homes, Beazer Homes and other companies are preventing customers from suing if their home has a flaw, which can include extremely expensive repairs and threaten harm to those who live inside them.
  • Entertainment and Online Retailers: While it may seem odd to file a complaint against services such as, Barnes & Noble, Netflix, Hulu, Groupon, eBay, Paypal, or Dropbox, these companies prevent consumers from appearing in court if, for instance, PayPal’s security was breached and your personal information was stolen.
  • Employers: Those who work for businesses such as Forever 21, Hobby Lobby, Dillard’s, Nordstrom, and Papa John’s sign away their right to pursue a claim if they are denied their rightful wages, and often times they are banned from a class action suit to pursue a misclassification issue or other problem that affects many workers.

Unfortunately, the widespread use of forced arbitration clauses leave consumers with no alternative in some fields. Fortunately, some groups are fighting back against this trend, and individuals can help by educating themselves on this issue. Spreading awareness of forced arbitration and pressuring companies to reject these clauses can help protect consumers’ rights for the future.