Alternative dispute resolution has become very popular in recent decades as so many parties involved in disputes seek to avoid the rigors of the court process, often relying on arbitration contracts. That is an understandable goal, considering the amount of stress, expense, and inflexibility that often accompanies litigation. Sometimes though, there may be little choice for consumers as they sign away their right to use the power of the traditional courts. As ADR has risen in popularity, so have arbitration contracts often required by large corporations when selling products to consumers, aiming to fend off any chance of lengthy litigation at the pass. Today, many consumers may buy a cell phone or open a bank account and have no idea they signed an arbitration contract.

The Arbitration Contract May Be Very Restricting for the Consumer

For many consumers, nothing goes wrong, and no one ever wonders whether signing that agreement was a good thing or not. But if you have a major issue with a lender or corporation who has you tied into an arbitration contract, you may find that it could be very restricting, not working in your best interest at all. The benefits of arbitration, to include savings of money, time, and allow for a decision to be reached more quickly by a neutral party, may not seem to apply if you are up against a multibillion dollar company—or perhaps even just your employer.

The Benefits of ADR May Not Apply at All

If the party you are going to arbitration with has infinitely more resources, you may find yourself getting the short end of the stick in ADR; in fact, you may find yourself forced to drive a long distance to the place agreed up on the contract for dispute resolution, paying fees, and waiting much longer than expected for the ordeal to be over. This may be very disappointing if you had a valid reason to fight against the company, whether for overcharges, mistreatment, inappropriate practices, defective products, harassment, or more.

Consumers Will Be Able to File Class Action Suits, Despite Arbitration Agreements

Previously, the arbitration clause squashed any hopes for large groups of individuals to bring forth class action suits. In July, however, the Consumer Financial Protection Bureau issued a statement saying that the following would not be able to stop consumers from bringing class action lawsuits:

• Banks
• Credit card companies
• Student lenders
• Payday lenders
• Debt collectors
• Credit reporting companies

A recent news article pointed out that three-fourths of banks did require arbitration contracts. With this new rule, consumers will have greater recourse when seeking restitution.

Contact Us with Questions

Do you have questions about an arbitration contract? Call Shane Coons now at 949-333-0900 or email us at Shane.Coons@seclawoffices.com. We will be glad to review your case, answer your questions, and help you move forward with success.