Consumers Want to be in Europe; Corporations Want to be in the U.S.: How to Reform Mandatory Consumer Arbitration Agreements to be Fair to Both Parties

Kelly Parfitt, Thomas M Cooley Law School

Abstract

Arbitration is a popular method of resolving legal disputes between businesses. However, in the last few years, corporations have begun putting mandatory consumer arbitration agreements in small print on sales contracts and receipts for consumer goods, credit cards, and mortgages. Consumers are forced to pay fees much higher than court costs, depending on the case. An arbitrator will do hundreds of cases with the same corporations, be familiar with and even in some cases be affiliated with the corporation. This system results in the overwhelming majority of cases being won by corporations. But in the European Union, consumers are given free legal help and the process is overseen by the government to make sure it is fair to both sides. The United States needs to reform this system to be equal and cost-effective.