Dispute resolution process between consumers and businesses
The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject. You may improve this article, discuss the issue on the talk page, or create a new article, as appropriate.(May 2013) (Learn how and when to remove this message)
Disputes between consumers and businesses that are arbitrated are resolved by an independent neutral arbitrator rather than in court. Although parties can agree to arbitrate a particular dispute after it arises or may agree that the award is non-binding, most consumer arbitrations occur pursuant to a pre-dispute arbitration clause where the arbitrator's award is binding.[1]: 280
In the United States, there is an ongoing debate over the use of arbitration clauses in consumer contracts. Differences between arbitration and litigation include the costs of resolving a case, the speed of resolution, and the procedure of resolving a case, including how and where the arbitration is conducted and the availability of discovery. Critics of consumer arbitration say that arbitrators and arbitration administrators can be biased (in part due to the repeat-player effect), arbitration clauses are not conspicuous, and for many classes of consumer goods and services, nearly all providers require arbitration. Proponents of consumer arbitration cite "consumer-friendly" terms that lower the dispute resolution costs of consumers and provide incentives for consumers to bring claims in arbitration. Most arbitration clauses require parties to waive their right to proceed on a class action basis in either court or arbitration,[2][nb 1] and, in the United States, the debate over consumer arbitration has also featured discussion of the merits of class actions.
In 2011, the Supreme Court of the United States ruled in AT&T Mobility v. Concepcion that state laws that in effect require the availability of class actions to resolve consumer disputes are preempted by the Federal Arbitration Act.[3] The ruling resulted in the adoption of new arbitration clauses or changes to existing ones in consumer contracts,[4][5] as well as renewed efforts to persuade the federal government to regulate or ban the usage of consumer arbitration clauses.[6]: 139
The support given to consumer arbitration under United States law (particularly the Federal Arbitration Act) has been compared to other countries, whose laws restrict or ban consumer arbitration.
^Rutledge, Peter B. (2008). "Who Can Be Against Fairness? The Case Against the Arbitration Fairness Act". Cardozo Journal of Conflict Resolution. 9: 267–281.
^Lazarus, David (2011-10-18). "Bill aims to restore consumers' right to sue". Los Angeles Times. Retrieved 21 February 2013.
^ abAT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011)
^Milian, Mark (2011-09-21). "Sony: Supreme Court ruling spurred changes to PlayStation terms". CNN. Retrieved 21 February 2013.
^Newman, Jared (2012-02-06). "Top EULA Gotchas: Website Fine-Print Hall of Shame". PCWorld. Retrieved 21 February 2013. Thanks to a Supreme Court ruling last year, tech companies are allowed to block class action lawsuits in their terms of service. The ruling allowed AT&T to force customers into arbitration, which tends to favor companies over consumers. Since that court decision, several companies have taken advantage of the opportunity to stop potential class action lawsuits. Microsoft, with its Xbox 360, and Sony, with its Playstation 3, are notable examples.
^Wilson, Jodi (2012). "How the Supreme Court Thwarted the Purpose of the Federal Arbitration Act" (PDF). Case Western Reserve Law Review. 63 (1): 91–140. Retrieved 14 July 2013.
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