The federal CFPB released a comprehensive study on forced arbitration (which, despite the similar name, we’ve noted previously is very different from mandatory arbitration.) The results of the study are honestly not shocking: the result is that forced arbitration clauses in corporate contracts do nothing but revoke the civil rights of consumers.
Highlights from the study include:
- Tens of millions of consumers use consumer products or services that are subject to these clauses
- 85%-100% of these clauses prevent class actions, which prevents consumers from banding together with others with similar disputes
- Very few people are aware of these clauses: less than 7% of consumers subject to forced arbitration for their credit cards knew they could not take their credit card issuers to court
- Consumers are only represented by counsel in 60% of cases, where the companies were nearly always represented
- Only about 1/5 of consumers prevailed in their proceedings
- When companies made claims or counterclaims, they prevailed 93% of the time