Many arbitration agreements also include class-action waiver provisions, meaning consumers are barred from bringing or joining class actions against the company and must arbitrate their claims individually. In response, mass arbitration has arisen as another method of dispute resolution, allowing hundreds or thousands of similarly affected consumers to file arbitration demands simultaneously against a company, pressuring it to settle.
Key Rights Under the Federal Arbitration Act
The FAA provides that written arbitration agreements shall be valid, irrevocable, and enforceable unless grounds exist for revocation of the contract. Several recently introduced bills in the U.S. legislature would amend the FAA to limit the enforcement of arbitration agreements and class-action waivers in certain contexts, in an attempt to curb mass arbitration. For now, these bills are not in effect.
Consumers have several key rights under the FAA, including the right to enforce or challenge an arbitration agreement, protection against unfair contracts, and more.
Right to Enforce or Challenge an Arbitration Agreement
Under the FAA, consumers have the right to have a dispute resolved by an arbitrator instead of a judge. This act requires most written arbitration agreements in contracts to be treated as valid and enforceable, so consumers can ask a court to compel the other party to arbitrate. However, if the contract is deemed fraudulent or unfair, you may be able to challenge the arbitration agreement to regain your right to sue.
Rights Regarding Fees and Costs
Typically, companies must cover the upfront administrative costs of arbitration, making mass arbitration an effective tool in various industries for pressuring companies to settle claims quickly. This can depend on the arbitration organization used for the proceedings. The FAA ensures arbitration costs are reasonable and that companies cover them when required.
Protection Against Illusory and Unfair Contracts
Courts can invalidate an arbitration agreement under standard contract law if a company tries to charge the consumer exorbitant fees or unilaterally changes the terms retroactively. Additionally, if the contract is found to be fraudulent or unfair, a court may deem it unenforceable.
How Corporations Use the FAA to Block Class Actions
In recent years, more and more companies have included class action lawsuit waivers in their mandatory arbitration agreements for using their products or services, barring consumers or employees from filing or joining class action lawsuits against the company. Major companies use the FAA’s backing to avoid accountability in a traditional courtroom. Mass arbitration has become a tool to push back against this avoidance.
New cases and investigations, settlement deadlines, and news straight to your inbox.
The Rise of Mass Arbitration
Despite arbitration agreements often including class-action waivers, consumers and employees have found a workaround through the mass arbitration process. Consumer advocates have used the FAA to bring thousands of individual claims against companies with unlawful practices, leveraging the law’s strict requirements.
How Consumers Can Protect Their Rights
Review Contracts Before Signing
Carefully read arbitration and waiver clauses in contracts or terms of service for goods and services before signing them. If you have already agreed to the terms of service or contracts with mandatory arbitration agreements, you still have legal options for seeking redress if the company causes you harm.
Seek Experienced Legal Guidance
After experiencing financial, emotional, or other harm due to a company’s misconduct, you have legal rights and options for seeking redress, even when arbitration agreements are at play. It’s crucial to speak with an attorney as soon as possible to identify and understand your options.
At Class Action U, our mission is to connect victims with experienced mass arbitration lawyers at our partner law firms. If you’ve been affected by an issue that could potentially merit a mass arbitration, we encourage you to share your information with us. For those eligible to participate in an existing mass arbitration, our site offers a straightforward way to sign up.
Explore Mass Arbitrations and Collective Actions
View our list of the latest active mass arbitrations and see if you qualify for compensation.
When Companies Take Advantage of Consumers, We Can Help
Class Action U’s accomplished partner attorneys at Milberg PLLC have successfully recovered more than $250 million for wronged consumers through alternative dispute resolution.
