> What is the disadvantage of arbitration from a consumer's point of view?

Chiefly, that the arbitrator is almost universally chosen by the company or for the benefit of the company and the customer (I object, strenuously, to being called a "consumer") almost never wins.

http://www.nytimes.com/2015/11/02/business/dealbook/in-arbit...

I don't get it, isn't the arbitrator supposed to be an unbiased third party? Whether or not he's chosen by the company should be irrelevant.

Yes, but for a someone to be truely unbiased they need to be completely independent. If there's any sort of relationship to either party they will be biased somehow.

A good approach would be the random selection of a few members of the general populace, or the use of a third party skilled in legal matters with payment guaranteed no matter what the verdict.

It's like we've seen this problem before

Do you think the arbitrator would like to be chosen by the company again in future?

> Whether or not he's chosen by the company should be irrelevant.

This only holds if the people at that company are morally-perfect robots who never make choices subtly biased in their own favor.

In a perfect world it wouldn't matter, because the arbiter would be neutral.

"A perfect world" is irrelevant.

One aspect is that arbitration agreements almost always block class action lawsuits which can be hugely advantageous to a company. If a group of people have their rights or contacts violated, each must now pursue it individually, at potentially high personal expense in a system the company has more control over. Class action lawsuits are far from flawed, but they can be a terrifying prospect to companies. With arbitration, they now get to fight N people one on one instead of a talented team of big time lawyers indirectly representing all wronged parties (and keeping all the money usually, but it still punishes the company, and you can at least still bring your own suit).

You're waiving your right to have your case be heard by a judge and jury. You can still opt for arbitration without waiving those rights, but you can be guaranteed that there is a reason you're being asked to waive them by a large company (it's so they can ignore the law and the resulting costs & settlements lean in their favor slightly or significantly better than they would from actual litigation).

"Arbitration: The Good, The Bad, And The Ugly"

http://apps.americanbar.org/buslaw/newsletter/0038/materials...