The Recent Assault on Consumer Arbitration Clauses

After years of growth, the Federal Arbitration Act ("FAA"), and numerous court decisions emphasizing the strong public policy in favor of arbitration as a cost-effective means of resolving disputes, arbitration now appears to be under siege—particularly in the consumer context. Many consumer contracts, including those involving cellular phones, credit cards, and other consumer finance products, such as automobile retail installment contracts, contain mandatory arbitration provisions requiring consumers to resolve any disputes through arbitration rather than through the courts. In many cases, these contracts have attempted to establish arbitration an alternative to the high cost, slow pace, and uncertainty of class action litigation. Now consumer arbitration itself has become the focus of public entity investigations and class action lawsuits. Ultimately, consumer arbitration will likely survive, perhaps with new guidelines and consistent rules governing the process so companies know when their arbitration agreements will be enforced.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Published In: Alternative Dispute Resolution (ADR) Updates, General Business Updates, Consumer Protection Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sheppard Mullin Richter & Hampton LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »