The New York Times this week editorializes against what it calls "forced arbitration." What the Times means is "arbitration clauses in form contracts typically drafted by businesses and presented to consumers (along with most of the other terms on the form) on a take-it-or-leave-it basis." The Times focuses on the recent Consumer Financial Protection Bureau study I blogged about here.
The Times says banks' widespread use of use of such arbitration clauses "results in a systematic denial of justice." In contrast, I argue that such clauses should generally be enforceable, as they are under current law. Further analysis, I co-authored with KU Law Professor Chris Drahozal is here.
The Times does recognize that class actions are a big part of the debate on consumer arbitration. This is true not only at the Consumer Financial Protection Bureau, but also in Congress, and in the courts. For recent congressional testimony, see here.
arbitration can be a viable option to "lumping it" even in these contexts. Lumping it is often the only other option available if the parties cannot negotiate a satisfactory outcome to the dispute or afford full-blown litigation.
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