Arbitration Agreement Jams: A Growing Concern for Consumers

Arbitration is a means of resolving disputes outside of the court system, where a neutral third party, an arbitrator, makes a binding decision. In recent years, however, arbitration agreements have become increasingly common in everyday consumer contracts, from credit cards to employment contracts. While the process may seem efficient and cost-effective, many consumers are finding that arbitration clauses in their contracts can create what is commonly known as an “arbitration agreement jam.”

An arbitration agreement jam occurs when a company, often one with a large customer base, includes arbitration clauses in its contracts that require disputes to be resolved individually, rather than through class-action lawsuits. This means that if a company engages in wrongdoing that affects many customers, each customer must bring their own individual arbitration case against the company. This can lead to a backlog of cases and a lengthy and costly process for consumers.

Additionally, these arbitration clauses often contain provisions that limit the rights of consumers, such as requiring arbitration to take place in a specific location, limiting discovery, and putting caps on damages that can be recovered. These provisions can make it even more difficult for consumers to seek justice in arbitration.

Arbitration agreements also tend to favor companies over consumers. The arbitrator is often chosen by the company, and the decision is typically final and binding, with very limited opportunities for appeal. This can lead to a lack of accountability for companies that engage in wrongdoing, as they can often avoid large payouts to consumers.

Furthermore, the process of arbitration is often confusing and overwhelming for consumers. Unlike a court of law, there is no judge or jury, and the rules of evidence are often relaxed. As a result, consumers may feel like they are at a disadvantage and may struggle to navigate the process.

In recent years, there has been a pushback against the use of arbitration clauses in consumer contracts. Some states have passed laws that limit the use of these clauses, while others have successfully challenged them in court. However, arbitration agreement jams remain a growing concern for consumers.

As a consumer, it is important to be aware of arbitration clauses in contracts and to understand their implications. If possible, consumers should try to negotiate these clauses out of contracts before signing. In cases where an arbitration clause is unavoidable, consumers should arm themselves with knowledge about the arbitration process and their rights.

In conclusion, arbitration agreement jams are a growing concern for consumers. Companies are using these clauses to limit the rights of consumers and avoid accountability for wrongdoing. As consumers, we must educate ourselves about these clauses and push for laws that protect our rights.