Forced 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."

Origins

In 2011 and 2013 cases received rulings from the Supreme Court of the United States wherein corporations can strip individuals of their constitutional right to civil jury trial and force them into private, corporate-controlled arbitration systems to resolve disputes. These rulings also stated that companies have the unilateral right to ban class actions by inserting class action “waivers” into these arbitration clauses.

In 2018, the scope of these decisions were expanded by Epic Systems Corp. v. Lewis, wherein workers whose employment contracts contain class action waivers was decided to not violate legal rights granted to workers by the National Labor Relations Act. This decision impacted millions of employment contracts, and analysis by the National Law Journal has shown that the employment cases, most of which were class actions, “broke in favor of the defendant.” At least 50% of these cases compelled plaintiffs to arbitrate.

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:

"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."

Currently, in the United States, arbitration clauses such as this one are legal under the Federal Arbitration Act (FAA). Efforts have been made, however, to prohibit forced arbitration, most notably the Forced Arbitration Injustice Repeal (FAIR) Act of 2023. The United Nations has published a guideline for consumer protections in 2016, which lists the following under IV 11(c):

"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"

Why it is a problem

Revocation of rights

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.

Bypassing of constitutional rights

Due to the out of place nature of arbitration, various rights granted by the US constitution and its amendments are entirely bypassed.

The 7th amendment, also known as the right to a trial by jury, is bypassed via forced arbitration. Additionally, the 6th amendment, 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, 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.

Inconvenient opt-out procedure

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:

"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]

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.

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. 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.

Bricking until agreement

An example of forced arbitration, where the user has to agree to arbitration, regardless of if the software was previously installed on their device

For digital software in particular, they can be retroactively amended to require the user to agree to forced arbitration, while blocking the user from accessing the content they paid for until they agree to this binding arbitration. In the case of the mobile game Bad Piggies, published by Rovio, regardless of if the end user chose to not update their game or had the game previously installed since before the publisher instituted arbitration, said user is incapable of playing the game until they agree to binding arbitration.

Examples

Main article: List of products and services with forced arbitration

Some examples of arbitration clauses in terms and conditions include:

• Bandcamp Terms of Service, as of 2025-10-20. In addition, users in countries where forced arbitration is not allowed cannot use the service: "Use of the Service is not authorized in any jurisdiction that does not give effect to all provisions of these Terms of Use, including without limitation, this section."
• CNN Terms of Service, as of 2025-10-13 "14. CLASS ACTION AND JURY TRIAL WAIVER"
• Indeed Terms of Service, as of 2025-08-22 - Section D: General Terms for All Users - 12. Arbitration Agreement
• Instagram Terms of Use - Section 7.4 - How We Will Handle Disputes
• Itch.io Terms of Service Section 15. Class Action Waiver does not force arbitration, but still seeks to revoke rights to participate in class action or collective arbitration proceedings.
• Powell's Books - Has forced arbitration clause in their Term of Use.
• Section 13.1. Binding arbitration agreement and class action waiver, of 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."
• Sony PlayStation Network Terms of Service - Section 14 - Binding Individual Arbitration
• Roku, in March of 2024, prompted a pop-up on its devices for the tv owners to accept new terms of use, which included preventing "mass arbitration" from multiple plantiffs, before being able to use their devices. Opting out can be done by mail, but only after accepting the agreement shown on the TV.
• Spotify's End User Agreement, since 2015, contains a Mandatory Arbitration Agreement and Class Action Waiver
• Ticketmaster Terms of Use - Section 17 - Mandatory Arbitration Agreement and Class Action Waiver
• Wayfair uses forced arbitration language in the Legal Disputes section of their Terms of Use. On 6 November 2025, the company emailed account holders notifying them of a change to the Legal Disputes section, and stating "You do not have to do anything to accept the updated Terms. Your continued use of our websites, apps or any of our services, including your account, indicate your acceptance of the updated Terms."
• Western Digital - Has a forced-arbitration clause in the warranty for a ST500DM002-1BD142 hard drive. Clause 1, section "C". (And possibly other products.)
• Yahoo Terms of Service - Section 14.2.b "BINDING ARBITRATION AGREEMENT"
• Zenimax Media (Bethesda) has an arbitration agreement that can only be opted out of within 30 days, by mail.

• Zoom's Terms of Service, Section 27.1, 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."

• Hubitat's Terms of Service, Section 13 "ARBITRATION/WAIVER OF JURY TRIAL."

Legal cases

Many cases, often class actions, were turned away because of forced arbitration clauses, below is an incomplete list of consumer protection cases shut down by forced arbitraton.

Case name	Year	Summary	Related article
Clemins v. GE Money Bank, No. 11-CV-00210, 2012 WL 5868659	2012	[TBA]
Jabbari v. Wells Fargo & Co., No. 15-CV-02159-VC (N.D. Cal. 2017).	2017	In 2017, Wells Fargo settled with many of its customers whose credit scores were harmed after thousands of bank employees opened as many as 3.5 million fake checking and credit card accounts in customers’ names to meet the company’s aggressive sales goals. Yet for years, the company had forced complaining customers into arbitration and just a few months before the bank agreed to settle this case, it tried to kill the case by forcing defrauded customers to arbitrate.
G.G. v. Valve Corp., No. 2:16­cv­01941, 2017 U.S. Dist. LEXIS 50640	2017	[TBA] - Lawsuit against valve over CS:GO loot boxes being gambling, compelled into arbitration
Gutierrez v. Wells Fargo Bank, NA, 889 F.3d 1230	2018	From 2008 to 2009 across various class actions, Wells Fargo was abusing its forced arbitration clause to combat legal cases wherein the company unlawfully charged overdraft fees.
DeNicolo v. The Hertz Corp, No. 19-210	2019	[TBA]