4 ms·
Forced consumer arbitration has been widely adopted solely because it is used to preclude class actions. Some state courts send matters to public arbitration,
by dd36 9y ago
Forced consumer arbitration has been widely adopted solely because it is used to preclude class actions. Some state courts send matters to public arbitration, which is decidedly different.
There are parts of forced consumer arbitraiton that companies do not like, but there's too much upsdie to precluding class actions. Things companies don't like include: the high up front cost and the lack of appeals.
There's nothing legally preventing arbitrators from being vehemently pro-consumer. The incentives prevent it but, legally, an arbitrator could award a crazy amount of money to a consumer on a tenuous basis and there's little that could be done. It's interesting that no such examples exist, however.
- deleted 9y ago[deleted]
- Latty 9y agoNothing preventing them? How many companies will hire the arbitrator that is pro-consumer? There are obvious incentives for the arbitrators to favour the people paying them - individuals are not going to be doing a lot of business with them, companies are.
- megy 9y ago> Nothing preventing them? How many companies will hire the arbitrator that is pro-consumer? He says exactly that in his comment. There is no law stopping them from doing it.
- Latty 9y agoYou are right, on re-reading the intent is clear. In my haste, I read that as "there is nothing stopping them from being pro-consumer, so there is no reason to assume that the judgements favour the businesses" for some reason.
- BurningFrog 9y ago> How many companies will hire the arbitrator that is pro-consumer? Are the arbiters really hired by the company?
- cosmie 9y agoGenerally, the company lists specific approved third party arbitration administrators as part of the arbitration clause, and that administrator is in charge of picking a specific arbitrator for a case. There’s only a handful of large arbitration associations and one of those is usually picked for most contracts. If you piss a business Off too much, they’ll remove you as an approved administrator and that can hurt. A lot. So you can’t be too pro-consumer. But also, if you show provable bias, the arbitration can be thrown out. So it’s really a fine line around callous indifference that leans towards the business, rather than outright anti-consumer. As for the hiring part - the business pays most of the arbitration fees, but the consumer is on the hook for a nominal amount plus any attorney fees and potentially extra costs like expert testimony.
- intended 9y agoSo basically the credit rating agencies scenario all over again.
- BurningFrog 9y agoYeah... I can see how third party arbitration can work well between corporations that each have a legal department making sure a reasonable arbiter is picked, but I'm much less hopeful about whenever a single consumer randomly ends up in this situation.
- bzbarsky 9y agoThere _are_ ways to set up arbitration to be reasonably neutral if that's a goal. One contract along those lines that I saw basically goes like this: each party picks its own arbitrator (presumably biased toward that party, whatever). Then those two arbitrators together select a third arbitrator, who will actually arbitrate the dispute. Of course that's not what binding arbitration clauses look like, at all.
- candiodari 9y agoNote that arbitration clauses obviously do not sign away your right to sue, they just force you to put in a decent effort to go through arbitration first.