'A recent academic study confirms what consumer advocates have been saying for years: Mandatory arbitration is a rigged system — rigged, that is, in favor of businesses.' Davidlaz writes:
Chase cardholders are being notified that they’ll have to agree to arbitrate any disputes and forgo the option of filing a lawsuit.
“The whole game is stacked against us,” said Amit Seru, a finance professor at Stanford University’s Graduate School of Business and a co-author of the study.They found that companies routinely pick arbitrators with track records of making industry-friendly decisions. They also found that arbitrators know that the more they rule in favor of businesses, the greater the likelihood they’ll be tapped for future cases .
The study adds significant heft to long-standing criticism of forced arbitration as a sneaky tool for preventing consumers from sticking up for their rights.These suckers are routinely inserted in the fine print of contracts you tacitly agree to, or click your acceptance of, when you receive service from a wide array of industries, including telecom companies, credit card issuers, health insurers and providers, electronics makers and others.
“As a result, few consumers take action, and the company has little reason to change its behavior,” she said. A key advantage enjoyed by businesses is that they have far more experience at arbitration than consumers, the researchers found. The average financial firm involved in the study had 81 past arbitration cases under its belt. The average non-financial firm, such as a wireless-phone company, had 133 cases.As a result, the researchers said, businesses have a much better sense of which arbitrators will be predisposed to industry-friendly outcomes, whereas consumers have no idea what to expect.
“Corporations use their fine-print contracts to make it even harder to get justice by removing our basic right to choose to get our complaints heard before an impartial judge and jury, forcing us into a private arbitration system that they control,” she said. “Then they choose and hire the private firms that will hear their cases.”“If you look at the data across many, many years, you see a pattern that is biased against consumers and in favor of firms.
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