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Forced Arbitration is a practice in which businesses can require their customers to resolve disputes through arbitration, instead of a traditional court system. Per Wikipedia: "Arbitration is a formal method of dispute resolution involving a third party neutral who makes a binding decision."<ref name=":1">[[wikipedia:Arbitration#References|https://en.wikipedia.org/wiki/Arbitration]]</ref>
'''[[wikipedia:Arbitration|Forced arbitration]]''' is a practice in which businesses can require their customers to resolve disputes through arbitration, instead of a traditional court system. Per Wikipedia: "Arbitration is a formal method of dispute resolution involving a third party neutral who makes a binding decision."


== How it Works ==
==How it works==
Businesses will typically add an arbitration clause to their Terms of Service or Terms of Use. This clause generally outlines how disputes are handled between the consumer and the business. A good example of a typical arbitration clause can be found in Instagram's Terms of Use, which, as of January 6th, 2025, is under Section 7.4 - How We Will Handle Disputes:<ref name=":0">https://web.archive.org/web/20250106102429/https://help.instagram.com/581066165581870/ (January 6th, 2025) Retrieved January 13th, 2025</ref><blockquote>"Except as provided below, you and we agree that any cause of action, legal claim, or dispute between you and us arising out of or related to these Terms or Instagram ("claim(s)") must be resolved by arbitration on an individual basis. Class actions and class arbitrations are not permitted; you and we may bring a claim only on your own behalf and cannot seek relief that would affect other Instagram users."</blockquote>Currently, in the United States, arbitration clauses such as this one are legal under the Federal Arbitration Act (FAA).<ref name=":2">https://www.govinfo.gov/content/pkg/USCODE-2019-title9/html/USCODE-2019-title9.htm</ref> However, efforts have been made to prohibit forced arbitration, most notably the Forced Arbitration Injustice Repeal (FAIR) Act of 2023.<ref>https://www.congress.gov/bill/118th-congress/senate-bill/1376</ref>
Businesses will typically add an arbitration clause to their [[Terms of Service]] or Terms of Use. This clause generally outlines how disputes are handled between the consumer and the business. A good example of a typical arbitration clause can be found in [[Instagram]]'s Terms of Use, which, as of January 6, 2025, is under Section 7.4 - How We Will Handle Disputes:<ref name=":0">{{Cite web |title=Terms of Use |url=https://help.instagram.com/581066165581870/ |url-status=live |access-date=4 May 2025 |website=[[Instagram]]}}</ref><blockquote>"Except as provided below, you and we agree that any cause of action, legal claim, or dispute between you and us arising out of or related to these Terms or Instagram ("claim(s)") must be resolved by arbitration on an individual basis. [[Class action|Class actions]] and class arbitrations are not permitted; you and we may bring a claim only on your own behalf and cannot seek relief that would affect other Instagram users."</blockquote>Currently, in the United States, arbitration clauses such as this one are legal under the [[Federal Arbitration Act]] (FAA).<ref name=":2">{{Cite web |date=30 Jul 1947 |title=TITLE 9—ARBITRATION |url=https://www.govinfo.gov/content/pkg/USCODE-2019-title9/html/USCODE-2019-title9.htm |url-status=live |access-date=4 May 2025 |website=www.govinfo.gov}}</ref> Efforts have been made, however, to prohibit forced arbitration, most notably the [[Forced Arbitration Injustice Repeal]] (FAIR) Act of 2023.<ref>{{Cite web |date=27 Apr 2023 |title=S.1376 - Forced Arbitration Injustice Repeal Act |url=https://www.congress.gov/bill/118th-congress/senate-bill/1376 |url-status=live |access-date=4 May 2025 |website=www.congress.gov}}</ref>


== Why It's a Problem ==
The [[wikipedia:United_Nations|United Nations]] has published a guideline for consumer protections in 2016, which lists the following under IV 11(c):<ref>{{Cite web |date=2016 |title=United Nations Guidelines for Consumer Protection |url=https://unctad.org/system/files/official-document/ditccplpmisc2016d1_en.pdf |url-status=live |access-date=4 May 2025 |website=unctad.org}}</ref><blockquote>"Businesses should provide complete, accurate and not misleading information regarding the goods and services, terms, conditions, applicable fees and final costs to enable consumers to take informed decisions. Businesses should ensure easy access to this information, especially to the key terms and conditions"</blockquote>


=== Revocation of Rights ===
==Why it is a problem<!-- Extra reading:  https://www.congress.gov/congressional-report/116th-congress/house-report/204/1 -->==
The practice of Forced Arbitration is one that is designed to revoke the rights of the consumer. In this case, the consumer's right to sue or participate in a class action against a business. Instead, the consumer must work with an arbiter of the businesses' choosing behind closed doors to resolve claims, which is widely believed to result in biased outcomes.


=== Inconvenient Opt-out Procedure ===
===Revocation of rights===
Arbitration is often made inconvenient for users to opt-out of. Instead of giving users the option to do so at sign-up digitally, most businesses will require users to send a handwritten letter within 30 days of their sign-up to opt-out of arbitration. This type of opt-out clause can also be seen in Instagram's Terms of Use:<ref name=":0" /><blockquote>"You can opt out of this provision within 30 days of the date that you agreed to these Terms. To opt out, you must send your name, residence address, username, email address or phone number you use for your Instagram account, and a clear statement that you want to opt out of this arbitration agreement, and you must send them here:" [Address redacted]</blockquote>
The practice of forced arbitration is one that is designed to revoke the rights of the consumer. In this case, the consumer's right to sue or participate in a [[class action]] against a business. Instead, the consumer must work with an arbiter of the businesses' choosing behind closed doors to resolve claims, which is widely believed to result in biased outcomes.


This practice is similar to how gyms will often require members to travel to their location or send snail mail to cancel a membership, while an online system could easily be put in its place.
====Bypassing of constitutional rights<!-- Sources to read before integration:  https://scholars.law.unlv.edu/facpub/266/  https://www.clearygottlieb.com/-/media/files/arbitration-and-the-us-constitution-the-impact-of-federalism-and-due-process-on-the-enforcement-of-arbitration-agreements-and-awards-in-the-united-states.pdf  https://digitalcommons.law.uga.edu/fac_artchop/482/ -->====
Due to the out of place nature of arbitration, various rights granted by the US constitution and its amendments are entirely bypassed.<ref>{{Cite news |last=Zanville |first=Stuart |date=Sep 1, 2015 |title=Forced Arbitration |url=https://www.advocatemagazine.com/article/2015-september/forced-arbitration |url-status=live |archive-url=https://web.archive.org/web/20200921050552/https://www.advocatemagazine.com/article/2015-september/forced-arbitration |archive-date=Sep 21, 2020 |access-date=Mar 5, 2025 |work=Advocate Magazine}}</ref><!-- The exact date is a placeholder, since the article does not list the exact day in September it was published --><ref>{{Cite web |last=J. Mann |first=Kimberly |date=1997 |title=Constitutional Challenges to Court-Ordered Arbitration |url=https://ir.law.fsu.edu/cgi/viewcontent.cgi?article=1454&context=lr |url-status=live |access-date=4 May 2025 |website=ir.law.fsu.edu}}</ref><ref>Brunet,  Edward, Arbitration and Constitutional Rights (June 24, 1992). North Carolina Law Review, Vol. 71, pp. 81-120, 1992,  Available at SSRN: https://ssrn.com/abstract=2284464</ref>


=== Conflict of Interest ===
The 7th amendment,<ref>{{Cite web |title=Constitution of the United States Seventh Amendment |url=https://constitution.congress.gov/constitution/amendment-7/ |url-status=live |access-date=4 May 2025 |website=constitution.congress.gov}}</ref> also known as the right to a trial by jury, is bypassed via forced arbitration. Additionally, the 6th amendment,<ref>{{Cite web |title=Constitution of the United States Sixth Amendment |url=https://constitution.congress.gov/constitution/amendment-6/ |url-status=live |access-date=4 May 2025 |website=constitution.congress.gov}}</ref> also known as the right to a speedy trial, is also bypassed by arbitration since arbitrated cases can take excessively longer than traditional public trials,<ref>{{Cite web |date=12 Sep 2024 |title=How Long Does Arbitration Take? A Closer Look |url=https://adrtimes.com/how-long-does-arbitration-take/ |url-status=live |access-date=4 May 2025 |website=adrtimes.com}}</ref> especially when lawsuits that could have been filed under class action, end up being broken up into hundreds of individually arbitrated cases, such as what has happened with ''Bucher Law PLLC Vs. Valve Inc.''<ref>{{Cite web |last=Bucher |first=Will |title=Steam Case Explained |url=https://www.bucherlawfirm.com/steam-case-explained |url-status=live |access-date=4 May 2025 |website=BUCHER LAW PLLC}}
Companies track performance of arbitrators over time, and as such, are able to pick arbitrators that lean towards the industry rather than the consumer.<ref name=":1" /> While both the consumer and company theoretically have some control over the selection of the arbitrator, the company generally has an information advantage in the selection process. Furthermore, individual arbitrators have a long-term financial incentive to bias their rulings in favor of corporations, as the corporation is much more likely to become a "repeat customer" than the consumer. In extreme cases, entire arbitration firms may have a material conflict of interest.<ref name=":2" />
</ref>


== Examples ==
===Inconvenient opt-out procedure<!-- Read this, may integrate here:  https://www.nclc.org/study-99-of-consumers-unaware-they-are-subject-to-forced-arbitration/ -->===
Some examples of arbitration clauses in terms and conditions include:
Arbitration is often made inconvenient for users to opt-out of. Instead of giving users the option to do so at sign-up digitally, most businesses will require users to send a handwritten letter within 30 days of their sign-up to opt-out of arbitration. This type of opt-out clause can also be seen in Instagram's Terms of Use:<ref name=":0" /><blockquote>"You can opt out of this provision within 30 days of the date that you agreed to these Terms. To opt out, you must send your name, residence address, username, email address or phone number you use for your Instagram account, and a clear statement that you want to opt out of this arbitration agreement, and you must send them here:" [Address redacted]</blockquote>


Instagram Terms of Use - Section 7.4 - How We Will Handle Disputes<ref name=":0" />
This practice is similar to how gyms will often require members to travel to their location or send snail mail to cancel a membership, while an online system could easily be put in its place.


Sony PlayStation Network Terms of Service - Section 14 - Binding Individual Arbitration<ref>https://web.archive.org/web/20241216114722/https://www.playstation.com/en-us/legal/psn-terms-of-service/ (December 16th, 2024) Retrieved January 13th, 2025</ref>
===Conflict of interest===
Companies track performance of arbitrators over time, and as such, are able to pick arbitrators that lean towards the industry rather than the consumer.<ref>{{Cite web |last=Seru |first=Amit |date=Feb 2023 |title=Tipping the scales: Balancing consumer arbitration cases. |url=https://siepr.stanford.edu/publications/policy-brief/tipping-scales-balancing-consumer-arbitration-cases |url-status=live |access-date=4 May 2025 |website=Stanford Institute for Economic Policy Research}}</ref> While both the consumer and company theoretically have some control over the selection of the arbitrator, the company generally has an information advantage in the selection process. Furthermore, individual arbitrators have a long-term financial incentive to bias their rulings in favor of corporations, as the corporation is much more likely to become a "repeat customer" than the consumer. In extreme cases, entire arbitration firms may have a material conflict of interest.<ref>{{Cite web |date=20 Jul 2009 |title=NAF Announcement — Out of Consumer Arbitration |url=http://indisputably.org/2009/07/naf-announcement-out-of-consumer-arbitration/ |url-status=live |access-date=4 May 2025 |website=indisputably.org}}</ref>


Ticketmaster Terms of Use - Section 17 - Mandatory Arbitration Agreement and Class Action Waiver<ref>[https://web.archive.org/web/20250105150022/https://help.ticketmaster.com/hc/en-us/articles/10468830739345-Terms-of-Use#section17 https://web.archive.org/web/20250105150022/https://help.ticketmaster.com/hc/en-us/articles/10468830739345-Terms-of-Use] (January 5th, 2025) Retrieved January 13th, 2025</ref>
==Examples==
Some examples of arbitration clauses in terms and conditions include:<!-- Sort alphabetically! -->


In Section 27.1 of Zoom's Terms of Service, says "You and Zoom agree that any dispute or claim between you and Zoom arising out of or relating to this Agreement or the Services (a “Dispute”), including any related software, hardware, integrations, advertising or marketing communications, your account, or any aspects of your relationship or transactions with Zoom, will be resolved by binding arbitration, rather than in court." <ref>https://www.zoom.com/en/trust/terms/</ref>
*Instagram Terms of Use - Section 7.4 - How We Will Handle Disputes<ref name=":0" />
*Powell's Books - Has forced arbitration clause in their Term of Use.<ref>{{Cite web |date=2025-05-30 |title=Terms of Use {{!}} Powell's Books |url=https://www.powells.com/info/terms-of-use |url-status=live |archive-url=https://web.archive.org/web/20250528215842/https://www.powells.com/info/terms-of-use |archive-date=2025-05-28 |access-date=2025-05-30 |website=Powell's Books}}</ref>
*Section 13.1. Binding arbitration agreement and class action waiver, of [[Protonmail|Proton]]'s Terms of Service, says " Please read this section and the class action waiver section carefully – it may significantly affect your legal rights, including your right to file a lawsuit in court and to have a jury hear your claims. It contains procedures for mandatory binding arbitration and a class action waiver."<ref>{{Cite web |date=21 Jan 2025 |title=Terms of Service |url=https://proton.me/legal/terms |url-status=live |archive-url=https://web.archive.org/web/20250310210512/https://proton.me/nl/legal/terms |archive-date=10 Mar 2025 |access-date=4 May 2025 |website=Proton}}</ref>
*[[Sony]] PlayStation Network Terms of Service - Section 14 - Binding Individual Arbitration<ref>{{Cite web |title=PLAYSTATION NETWORK TERMS OF SERVICE AND USER AGREEMENT |url=https://www.playstation.com/en-us/legal/psn-terms-of-service/ |archive-url=https://web.archive.org/web/20241216114722/https://www.playstation.com/en-us/legal/psn-terms-of-service/ |archive-date=16 Dec 2024 |access-date=4 May 2025 |website=[[PlayStation]]}}</ref>
*[[Ticketmaster]] Terms of Use - Section 17 - Mandatory Arbitration Agreement and Class Action Waiver<ref>{{Cite web |title=Mandatory Arbitration Agreement and Class Action Waiver |url=https://help.ticketmaster.com/hc/en-us/articles/10468830739345-Terms-of-Use |archive-url=https://web.archive.org/web/20250105150022/https://help.ticketmaster.com/hc/en-us/articles/10468830739345-Terms-of-Use#section17 |archive-date=5 Jan 2025 |access-date=4 May 2025 |website=[[Ticketmaster]]}}</ref>
*Western Digital - Has a forced-arbitration clause in the warranty for a ST500DM002-1BD142 hard drive. Clause 1, section "C". (And possibly other products.) <ref>{{Cite web |title=Warranty {{!}} Western Digital |url=https://consumerrights.wiki/File:WD-HDD-Warranty.pdf}}</ref>
*Yahoo Terms of Service - Section 14.2.b "'''BINDING ARBITRATION AGREEMENT'''" <ref>{{Cite web |title=Yahoo Terms of Service {{!}} Yahoo |url=https://legal.yahoo.com/us/en/yahoo/terms/otos/index.html |url-status=live |archive-url=https://web.archive.org/web/20250315082242/https://legal.yahoo.com/us/en/yahoo/terms/otos/index.html |archive-date=2025-03-15 |access-date=2025-03-15 |website=Yahoo}}</ref>
*Zenimax Media (Bethesda) has an arbitration agreement that can only be opted out of within 30 days, ''by mail''.<ref>{{Cite web |title=ZeniMax Terms of Service |url=https://www.zenimax.com/en/legal/terms-of-service |access-date=2025-05-31 |website=ZeniMax Media}}</ref>
*Section 27.1 of [[Zoom]]'s Terms of Service, says: "You and Zoom agree that any dispute or claim between you and Zoom arising out of or relating to this Agreement or the Services (a “Dispute”), including any related software, hardware, integrations, advertising or marketing communications, your account, or any aspects of your relationship or transactions with Zoom, will be resolved by binding arbitration, rather than in court."<ref>{{Cite web |date=11 Aug 2023 |title=Zoom Terms of Service |url=https://www.zoom.com/it/trust/terms/?cms_guid=false&lang=null |url-status=live |access-date=4 May 2025 |website=[[Zoom]]}}</ref>


== References ==
==References==
{{reflist}}
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[[Category:Anti-Consumer_Practices]]
[[Category:Common terms]]
[[Category:Common terms]]
[[Category:Rights Stripping]]
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