With all big companies seemingly colluding to update their terms of service at the same time recently to include something about “ARBITRATION” – can someone please explain what this Arbitration agreement is?
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Arbitration is basically suing them for something. They’re trying to make you promise you won’t sue, or waive your right to sue, or something to that effect. Not all of it works, and not all of it is legal, but that won’t stop them from trying just in case it pays off.
It’s not collusion, it’s usually in response to changes in laws that either require them to change how they operate, allows them to do something different, or changes how they are required to communicate something.
It means you can’t take them to court, or at least public, government court. You essentially still go through a similar process, but there’s no jury, just an arbiter (judge), and it’s typically behind closed doors and confidential.
It is primarily a way for companies to avoid a huge class action lawsuit (a lawsuit that goes beyond just one person suing a company to include every consumer in the same position suing the company). An arbitration clause means if you opt to use the company’s product and agree to their terms of service, you give up certain rights to file a lawsuit. Instead, your complaint goes through a special person called an arbitrator, who is supposed to listen to both sides of the story and make a binding decision on if any compensation/penalty is due.
In practice, arbitration clauses render class action lawsuits nearly impossible, which tilts the calculus for behaving badly strongly in favor of the company. Few people will pursue legal action against a company, and even if a handful do, it’ll be a lot cheaper to continue behaving badly and pay these few off than it would to lose a big class action lawsuit.
It’s actually even worse than it sounds. I have gone through arbitration. There are fees you have to pay to even submit your claim. The arbitrator is actually employed by an agency (there are a few), and the agency is selected *by the company you are filing against*, which obviously creates some clear conflicts of interest. If the arbitrator decides against you, you are then left with zero avenues for appeal through the regular justice system. It is a multilayered, anticonsumer scam.
It’s in response to a recent number of mass arbitration filings by class action plaintiff attorneys. Because companies generally have to pay the arbitration fees, someone realized that you could file thousands of arbitration claims and then demand the company settle to avoid a multi-million dollar arbitration bill.
Arbitration is like “pre-court” basically. It’s more or less a mediation, where both interested parties sit before an “impartial” third party to try to reach a settlement before actually hitting a court room. In theory it’s supposed to save everyone time and money.
In practice, it’s just another hurdle to filing a lawsuit against a company. By having these clauses is the “user agreement” corporations are able to waste your time and energy. The whole point is they hope you’ll either a) burn out and give up, b) take a smaller settlement and sign an NDA or c) waste so much time in arbitration that by the time you actually get to court, you don’t have adequate time/energy/money to actually fight and win.
There’s not any collusion, it’s just counsel for one company came up with this, and others heard about it and ran with it.
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