Why You Should Opt Out Of Forced Arbitration, In 3 Sentences

While more and more companies are adding “forced arbitration” clauses to their terms of service, only a handful of these businesses are offering customers the choice to opt out of this part of the contract. Here are the reasons why you should take advantage of that option whenever possible.

1. Forced arbitration takes away your right to file a complaint in a court of law against a company that’s wronged you.

2. Companies want you to arbitrate because the system has been shown to be heavily unbalanced in favor of businesses — who have the legal knowledge, experience, and funding to put up a proper defense — while harmed consumers often enter into the complicated process without legal representation.

3. Most arbitration clauses also take away the right of groups of harmed consumers to pool their similar complaints together, forcing each customer into going through a binding arbitration that puts limits on damages; meaning companies can harm large groups of customers but get away with only paying out to those people who are willing to arbitrate.

By opting-out you…
1. Can still agree to arbitrate, if you would prefer that option.

2. Can still agree to settle out of court.

For these reasons, it is our recommendation that consumers opt-out of forced arbitration clauses, whenever possible.

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  1. DVnLRmx5ZBj says:

    This advice is worthless. If we could opt out, it wouldn’t be “forced” arbitration. Very few companies allow consumers to opt out (fewer than 15% in a citizen.org survey in 2009, and it’s probably worse now).

    Arbitration is unbalanced not just because companies have “the legal knowledge, experience, and funding to put up a proper defense”. It is unbalanced because the companies pay for and sometimes own the arbitration firms. There are plenty reports of default judgments favoring the companies (c.f. Minnesota lawsuit).

    Perhaps Consumerist should mention H.R. 1020 and S. 931, even though they are long dead.

    • PhillyDom says:

      Several businesses, most recently Dropbox, have offered customers the opportunity to opt out of arbitration clauses before they go into effect. The Consumerist is saying that if offered the opportunity, take it.