Arbitration Tips-N-Tools (TNT): Round 19

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In this round of Arbitration Tips-N-Tools, Professor Amy Schmitz asks some of the leading arbitration practitioners about the biggest pitfalls of consumer arbitration in its current state, especially in a digital world, and faced with the complexities of the Covid-19 pandemic.

Round 19: What do you see as the biggest pitfalls of consumer arbitration in its current state – list your top 3?

Responses:

A) Steven G. Shapiro –

1. Consumers often don’t know that they are subject to arbitration, including time requirements and process to file complaints and to respond to inquiries.
2. Consumers often waive their right to participate in class actions.
3. Consumers often have better access to aid and advice for court proceedings and arbitration may be more mysterious.

B) Imre Szalai

1. Lack of meaningful consent, lack of meaningful consent, lack of meaningful consent!
2. Fewer procedural protections than in court, such as discovery rights or class procedures.
3. Confidentiality, which may make it more difficult to discover widespread wrongdoing (e.g., Wells Fargo churning scandal).

C) Erin Archerd

1. Consumers have no idea they are giving up their right to sue.  I see this issue as having at least two parts: first, consumers don’t bother to read their contracts in the first place so even if parties write the clearest, cleanest, most obvious ALL CAPS and BOLD clause laying out the arbitration terms, the consumer won’t have read it.  Second, few arbitration agreements make their scope clear.
2. Consumers aren’t given the option to opt out and if they are given one, it is onerous.  In an age when most communication happens online, you still see opt-outs that require sending paper mail, to a PO Box, by a certain date of receipt.  It’s cumbersome and archaic.
3. Repeat players make it hard for to arbitral organizations to maintain the appearance of neutrality.  Even if they are trying to be neutral, hearing all of the consumer claims for Company X will make any organizing appear to be in Company X’s pocket.  Not sure if more reporting or transparency would change this.