Chances are, you own a product or subscribe to a service you agreed to “binding arbitration” once you purchased it. But what is it?
Mandatory binding arbitration is certainly kinky, but not in a sexy way. For one, in the event of a disagreement with a company, you void your right to sue. Instead, a 3rd party, usually an arbitration company, hears both sides of the argument and renders a decision. For the most part, the ruling is final and can’t be appealed. Consumers lose many protections standard in a court of law.
Companies like binding arbitration because it’s more cost effective than dealing with a bunch of lawsuits.
We, on the other hand, see a conflict of interest. Arbitration companies get the bulk of their business from large corporations, so there’s a definite possibility for bias in order to protect their revenue stream.
In some cases, consumers have no choice. Try getting a cellphone without agreeing to binding arbitration. For more on how the procedure works, check out this article at Bankrate. — BEN POPKEN