Arbitration voluntary vs forced, Forced arbitration  benefits companies,  Problems and dangers noted by consumer advocates


From the National Association of Consumer Advocates.

“What is arbitration?

Arbitration is an alternative method of resolving disputes in which two parties present their individual sides of a complaint to an arbitrator or panel of arbitrators. The arbitrator decides the rules, weighs the facts and arguments of both parties, and then decides the dispute. Arbitration may be voluntary or mandatory.

What is voluntary arbitration?

In voluntary arbitration, both sides in the dispute voluntarily agree to submit their disagreement to arbitration after it arises, and they have an opportunity to investigate their best options for resolving their claim.

What is forced arbitration?

In forced arbitration, a company requires a consumer or employee to submit any dispute that may arise to binding arbitration as a condition of employment or buying a product or service. The employee or consumer is required to waive their right to sue, to participate in a class action lawsuit, or to appeal. Forced arbitration is mandatory, the arbitrator’s decision is binding, and the results are not public.

Where is forced arbitration commonly used?

Forced arbitration is being written into more and more terms of agreement and contracts, including those used for employment, insurance, home-building, car loans and leases, credit cards, retirement accounts, investment accounts, and nursing facilities, to name a few.

Are these clauses easy to find in the paperwork?

Generally not. Most Americans have never noticed this clause in the fine print of terms of agreement or contracts. Moreover, companies may call the condition “binding mandatory arbitration,” “arbitration,” “mandatory arbitration” or even call it a “dispute resolution mechanism.”

What’s wrong with arbitration?

Nothing, if its “voluntary” arbitration. In fact, you always have the right to arbitrate. But you never want to give away the right to sue if arbitration does not work. Companies want you to give away that right because they have advantage in arbitration and can evade accountability.”

“Why do so many consumers and employment and civil rights groups oppose forced arbitration?

Forced arbitration is preferred by companies because it benefits companies – not the employee or consumer. Here are problems and dangers noted by consumer advocates:

  • Individuals are often unaware they’ve agreed to forced arbitration. Most Americans have accepted good or services or a job with forced arbitration as a condition; and yet, very few individuals report having noticed a forced arbitration clause in the terms of agreements or contracts they’ve accepted.
  • Forced arbitration severely limits consumer options for resolving a dispute. Before any problem arises, you lock yourself into only one option—forced arbitration—for resolving all future disputes or problems. The contract typically also names the arbitration company that must be used – the one preferred by the company.
  • Forced arbitration clauses generally bind the consumer—not the company. The way many forced arbitration clauses are written, the seller retains its rights to take any complaint to court while the consumer can only initiate arbitration.
  • Arbitration is a private system without a judge, jury, or a right to an appeal.Arbitrators aren’t required to take the law and legal precedent into account in making their decisions. There is no appeal or public review of decisions to ensure the arbitrator got it right.
  • Employees cannot sue for discrimination, harassment, abuse, retaliation, or wrongful termination. In forced arbitration, the laws that protect us from discrimination based on age, sex, religion, race, disability, and unequal pay for equal work, such as the Civil Rights Act and the Equal Pay Act, become meaningless and unenforceable in court. Employees lose important protections for blowing the whistle on waste or fraud or for fighting retaliation for taking the family medical leave.
  • Consumers cannot sue for negligence, defective products, or scams. Just by buying a product or service, consumers can lose their right to hold a company accountable. Even if a retirement account disappears, a home is dangerous and defective, or a loved one suffers harm in a nursing home, a forced arbitration clause means there is no right to take the company responsible to court.”

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