Are mandatory arbitration agreements the new normal?
For clarity, a mandatory arbitration agreement is when a consumer or customer must "agree to have their case reviewed by a third party—called an arbitrator—and to be bound by the arbitrator's decision." The intent is that you waive your right to sue (in a regular court of law) the party you're entering this agreement with. But these agreements can, in some cases, be ruled as invalid by a court. The examples I've seen apply to the US, but I'd be interested in examples from other countries.
I'm sure I'm not the only one who's been noticing how out of hand it's becoming to see these statements plastered in Terms of Service and several other locations.
The most newsworthy example recently was Disney claiming that a statement like this in their Disney+ ToS also applied to a wrongful death case on one of their properties. As the linked article says, they backpedaled on this, but it's still disgusting and disturbing they even tried it in the first place.
The most recent example I've seen is this post on Mastodon where it was included on the packaging of a supplement.
I can't help but wonder if this is just a way to deter people from seeking litigation in the first place, especially if they aren't wealthy enough to hire a legal team that could poke holes in the legitimacy of their mandatory arbitration agreement.
I'm sure there's a nearly endless supply of examples of this, especially in software service agreements. But is there anything that can be done about it? Or is this just one more way corporations get to have more power than people that won't ever change?
Yes, they are ubiquitous now. They are a part of just about everything with a click wrap license and as part of just about any major sale that involves a contract. The last two times I bought a car at a dealership, they had arbitration agreements; I asked both times If I could avoid that one and they both refused to sell me the car without it. And that is the real reason why they are evil. Legally you are only bound by them if you agree to be bound; it’s supposed to be a consensual agreement. But in reality these are snuck into clickwrap terms that nobody reads or a company has so much leverage you can’t say no.
The one good thing about the Disney debacle is that it brought attention to how shitty these things are. Everyone should know about these and be up in arms about it.
'By buying food you agree to indemnify everyone in the food supply chain. Enjoy your E. Coli.'
Car dealerships with arbitration clauses?! I hope you walked out - that's just gross.
Oh, it’s extremely common. My last car was a specific purchase that was relatively rare on the market at the time too, so it was basically agree to it or keep looking for months until another dealer would have the car - who would undoubtedly also require arbitration clauses.
I walked out a few years ago, only to find that they ALL do it. I checked every dealership in town, and several miles out of town. It's impossible to buy an automobile without signing an arbitration agreement. We really need better legislation in the US.
We need laws about this stuff is really the short of it, but almost no one is making their campaign about fixing the legal system and the fact that the "click to accept" button can do just about anything short of sign you up for slavery (and frankly its gross how close it gets).
The simple fact is that most people don't think, or care, about stuff like this until it effects the directly. It affects EVERYTHING in a bunch of indirect ways, but most people figure "well they don't care about me", so it continues.
There are funds and orgs you can donate to that are fighting this, and similar issues (Louis rossman is fairly outspoken on the right to repair front but it overlaps with this, and I believe the EFF is much the same), but sadly until some major corp pisses off another major corp or politican in some notable way, I don't see it getting much better.
Another recent example of companies pushing the bounds is LG with their claim that customers agree to arbitration because of writing on the box of their fridges. This is egregious because it's common for people to have fridges delivered and installed without ever seeing the actual box.
https://www.nbcbayarea.com/investigations/consumer/lg-refrigerators-failures-update/3465620/
I’m conflicted about this. Having been involved in court cases, they are awful for both sides, and I think frivolous lawsuits designed to get a settlement just to avoid the hassle of court are a legitimate problem.
I'm doubtful that the scope of frivolous lawsuits is too big because lawyers aren't cheap. I'm sure they happen, but I'm betting huge numbers of 'frivolous lawsuits' are really just a story told to build public support against them.
Like with medical malpractice, for every frivolous case there are 100s of legitimate ones. And tort reform more or less fucks over people who are injured by negligent doctors.
I've been a class member of several lawsuits in my life. While I've never filed directly, not single one has been frivolous, all settled out of court. Some of the bigger ones:
This presumes that ordinary consumers are seeking out, hiring, and paying lawyers. This (admittedly biased industry study) has some still interesting points, and this one is particularly germane:
https://instituteforlegalreform.com/wp-content/uploads/2021/07/Food-Litigation-Update_web.pdf
and
The examples in the document contain a mix of clearly vexatious and in some cases somewhat legitimate claims, but the common factor is that the plaintiffs aren't paying out of pocket to lawyers. For the most part, lawyers are starting with an idea for a lawsuit and then searching for a product, company, and class members to fit their lawsuit's template.
I'm just getting at that its this story that resonates with the public (and getting policy passed), but the truthiness of it is somewhat akin to the 'Welfare Queen' narrative.
It's a real thing that happens, but the severity of its impact are overblown and the consequences of fixing it tend to be worse than the problem itself.
It’s not new, been this way since the 90s. They only place arbitration makes sense is complex cases between equals. Otherwise, the less wealthy/less connected party is screwed by arbitration.
It’s just yet another way that demonstrates precisely how mythological our american stories of freedom and equality are.
Best answer is to leave America and move to a country where shit like this wouldn't fly.
The United States has turned increasingly and notoriously anti-consumer over the past few decades, and it's honestly better to move somewhere that has a lower cost of living.
"Leave your state/country" is, in my opinion, an awful suggestion in response to nearly any talking point. To put my reasoning out there in a nutshell, it is tremendously difficult for many people to just pack up and leave. Financial burden (both the actual move and the cost of a new residence, potentially at a worse interest rate if you're opening a loan), creating more distance from family and friends you may rely on (especially for things like babysitting), and possibly culture shock are just a few reasons.
I would also be interested to hear which countries have a lower cost of living (especially compared to more rural places in the US), are progressive enough to have legislation against this, and will allow just about anyone to immigrate there.
Mandatory arbitration clauses are as far as I can tell unenforceable in the EU.
Not being familiar with Swedish law on the subject I looked it up, and mandatory arbitration clauses are essentially only allowed between companies. The Swedish arbitration act of 1999 states (my translation):
Original Swedish for reference: Lag (1999:116) om skiljeförfarande, §6.
The origin of this seems to be the EU council directive 93/13/EEC on unfair terms in consumer contracts
You edited out half that sentence and your answer isn't what they asked for.
It is part of what they were asking for, specifically the part I quoted to indicate that that was what I was replying to. I am not able to provide an answer to the rest. Should I not have contributed?
The original question was searching for a country that satisfied all three requirements - low cost of living, progressive, and easy immigration.
It appeared that they were aware of countries that met the individual requirements, hence asking for the combination, deliberately. It felt that you ignored them and missed the point of what they posted.
I understand if you feel that, but I see nothing in their reply that even implies it. I'd much rather make the mistake of assuming they don't know and contribute what information I can reliably source, than assume they do know and be wrong about that. In the worst case I think I come across as patronising, and I can live with that if it means I actually manage to assist in some more cases
I started noticing this around 2020 myself when we were having a house built. The builder put the wrong, significantly smaller, floor plan on our purchased lot and were trying to get us to take that as is for a slight but not near acceptable discount, or buy a separate more expensive lot from them. We were getting ready to sue but got hit with one of those.
They really are everywhere now in this world where everything is a subscription or has some expectation of being a longer term business agreement, like "owning" an appliance or car that you will most likely have to bring in for service.
If it's not too private of a topic, what came of that housing situation?
Oh no it's fine. Basically we made enough of a stink about it, calling them all the time, that we worked out another deal where we got the other lot with a different floorplan with the price of the floor plan when we signed the papers 1.5 years prior.
Basically we paid 5k more than we initially paid, vs them wanting us to pay 60k more.
Personally, I think the whole mistake was intentional on their part to try and milk us for more money since the market made a massive turn. Basically "Either give us more money or go back into the housing market"
It sounds like they still owe you $5000.
They have since gone out of business and never paid any of their creditors a dime.
What about having to go through arbitration versus court was the issue for you?
At that point our trust of the builder was so low we did not trust the decision to come in our favor. We did not trust their "third party" arbitrator or the fact that we would be unable to appeal if things went poorly for us.
We had been waiting 1.5 years for this house to get built after selling our previous house. We would have ended up back in an apartment for a much longer time not been able to afford a house due to rising interest rates if that deal did not work out. AND we had a kid on the way. It was a stressful time lol