Consumer_Action_Taskforce

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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 6, 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 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">https://www.govinfo.gov/content/pkg/USCODE-2019-title9/html/USCODE-2019-title9.htm</ref> Efforts have been made, however, 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>


The [[wikipedia:United_Nations|United Nations]] has published a guideline for consumer protections in 2016, which lists the following under IV 11(c):<ref>https://unctad.org/system/files/official-document/ditccplpmisc2016d1_en.pdf</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>
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>


==Why it is a problem<!-- Extra reading:  https://www.congress.gov/congressional-report/116th-congress/house-report/204/1 -->==
==Why it is a problem<!-- Extra reading:  https://www.congress.gov/congressional-report/116th-congress/house-report/204/1 -->==
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====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/ -->====
====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>https://ir.law.fsu.edu/cgi/viewcontent.cgi?article=1454&context=lr</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>
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>


The 7th amendment,<ref>https://constitution.congress.gov/constitution/amendment-7/</ref> also known as the right to a trial by jury, is bypassed via forced arbitration. Additionally, the 6th amendment,<ref>https://constitution.congress.gov/constitution/amendment-6/</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>https://adrtimes.com/how-long-does-arbitration-take/</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>https://www.bucherlawfirm.com/steam-case-explained
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}}
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===Conflict of interest===
===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>https://siepr.stanford.edu/publications/policy-brief/tipping-scales-balancing-consumer-arbitration-cases''Tipping the scales: Balancing consumer arbitration cases''. Amit Seru, Stanford Institute for Economic Policy Research. February 2023. Retrieved January 22nd, 2025.</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>http://indisputably.org/2009/07/naf-announcement-out-of-consumer-arbitration/ ''NAF Announcement — Out of Consumer Arbitration''. July 20, 2009. Retrieved January 22nd, 2025.</ref>
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>


==Examples==
==Examples==
Some examples of arbitration clauses in terms and conditions include:
Some examples of arbitration clauses in terms and conditions include:


Instagram Terms of Use - Section 7.4 - How We Will Handle Disputes<ref name=":0" />
* Instagram Terms of Use - Section 7.4 - How We Will Handle Disputes<ref name=":0" />
 
* [[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>
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>
* [[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>
 
* 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>
[[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>
* Section 13.1. Binding arbitration agreement and class action waiver, of [[Zoom|proton]] 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>
 
* 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>
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>
 
Section 13.1. Binding arbitration agreement and class action waiver, of [[Zoom|proton]] 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=2025-01-21 |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=2025-03-10 |access-date=2025-3-2025 |website=https://proton.me/}}</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>


==References==
==References==
Retrieved from "https://consumerrights.wiki/Forced_arbitration"