How Forced Arbitration Affects Consumers

If you have signed up for a credit card or even downloaded a coupon for a box of cereal recently, you probably have agreed to forced arbitration. Nearly everyone in America has agreed to a forced arbitration clause at some point in time, but the majority of Americans have no clue they have agreed to it, or what it entails.


“Arbitration” refers to an agreement between two or more parties to settle a dispute outside of court. In many cases, arbitration is mutually agreed upon by all the parties involved. When forced arbitration occurs, it is because a company has required its customers and/or employees to submit their disputes through binding arbitration instead of allowing them to pursue their right to sue, participate in a class action suit, or appeal.


A forced arbitration clause is hidden in the fine print of nearly all consumer contracts and company “terms and conditions” documents, barring consumers from exercising their right to sue the company that issued the contract should the company commit any wrongdoing. When a corporation does this, arbitration becomes the only way for consumers to seek relief.

If you purchased a cell phone plan with one of the nation’s largest telecommunication providers, and that company decides to overcharge you or violate your consumer rights, you void your right to sue when you sign the contract. If even the cereal you bought at a discount from downloading an online coupon is tainted and it causes you or your child to suffer significant health problems, because of the forced arbitration clause in the company’s terms and conditions, you cannot sue in a state or federal court. Although General Mills retracted forced arbitration due to a national outcry, this case sheds light on exactly how far these clauses go to strip consumers of their rights.


These days, it is nearly impossible to avoid forced arbitration. Unfortunately, the reason forced arbitration exists is because it favors the corporation over the consumer. Using forced arbitration clauses in contracts puts the ball in the corporation’s court, as the company cannot be tried in court for delinquent actions. To top it off, forced arbitration costs consumers more than taking matters to court. The telecommunication giants know that 99% of consumers will not attempt to exhaust resources to bring a claim through arbitration for being overcharged on their phone bill or receiving unwanted calls and texts. In this way they stand to make millions of extra dollars illegally without facing serious consequences.

What you can do in these situations is to be aware of forced arbitration clauses as an informed consumer. If you have been unfairly treated by a big corporation or even a small business, you need a consumer rights lawyer with experience in such cases. Jibrael S. Hindi and his team of Fort Lauderdale attorneys focus on consumer law. Call 844-JIBRAEL or contact us online for a free case evaluation.