banner

Arbitration Clause Could Signal The Death Toll to Consumer Class Actions

Arbitration ClauseAlthough arbitration clauses can be an effective means to controlling the risks and costs of litigation for larger businesses serving a large customer base, it may also mean the end of an era for successfully fighting these large businesses when they wrong consumers.

Over the past decade, large companies have started to insert individual arbitration clauses into a soaring number of consumer and employer contracts. These clauses are a way for large companies, like American Express, to circumvent the courts and bar people from joining together in class-action lawsuits. Class action lawsuits have, realistically, been the only effective tool for consumers to fight illegal or deceitful business practices.

What Are Class Actions?

Class action lawsuit is a type of lawsuit where one of the parties is a group of people who are represented collectively by a member of that group. In other words, a “class” is a group of individuals with similar complaints that band together to fight the big corporation that wronged them.

What Is an Arbitration Clause?

When signing up for most financial products, such as credit cards and bank accounts, individuals are typically required to agree to settle any disputes they may have with the company through arbitration. Arbitration is a form of dispute resolution that involves the private, judicial determination of a dispute by an independent third party.

Although corporations argue that arbitration is more effective than class actions because they resolve consumers’ grievances easily, court and arbitration records show otherwise. These records show that once blocked from going to court as a group, most people drop their claims entirely.

The Effect of Arbitration Clause on Class Action Lawsuits

Over the past decade, it has become increasingly difficult to apply for a credit card or a cell phone without agreeing to private arbitration. The same even applies for other things, such as renting a car or placing a loved one into a nursing home. The result of these “class action bans” has been, what some state judges call, a “get out of jail free” card. The reason for this label stems from the fact that it is nearly impossible for one individual to take on a large corporation with vast resources. When an individual is faced with his own fight, he is more likely to drop the case entirely.

The bottom line is that by banning class action lawsuits, large corporations have essentially disabled consumers to challenge wrong business practices, such as predatory lending, wage theft and discrimination. Despite this class-action ban, if you or someone you know has been wronged by the actions of a large corporation, you should still seek a free consultation with an experienced personal injury attorney to protect your legal rights.

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *

Client Testimonials

section start
Need Help with an Injury? We're Here to Help. Contact Us Today:
  • Gersowitz Libo & Korek, P.C. Recognized as one of the leading personal injury law firms in the New Jersey, Gersowitz, Libo & Korek, P.C. has recovered tens of millions of dollars for our clients in New York and New Jersey.
    157 Engle Street
    Englewood, NJ 07631
    Phone:(201) 541-8540
    Toll-free: (800) 529-9997
    Fax: (201) 541-8565
    Email: info@lawyertime.com
    Leave Us A Review : rev-map rev-sec
    ny
f
g
t
korek-buttonX