Forced consumer arbitration has been widely adopted solely because it is used to preclude class actions. Some state courts send matters to public arbitration, which is decidedly different.

There are parts of forced consumer arbitraiton that companies do not like, but there's too much upsdie to precluding class actions. Things companies don't like include: the high up front cost and the lack of appeals.

There's nothing legally preventing arbitrators from being vehemently pro-consumer. The incentives prevent it but, legally, an arbitrator could award a crazy amount of money to a consumer on a tenuous basis and there's little that could be done. It's interesting that no such examples exist, however.

Nothing preventing them? How many companies will hire the arbitrator that is pro-consumer?

There are obvious incentives for the arbitrators to favour the people paying them - individuals are not going to be doing a lot of business with them, companies are.

> Nothing preventing them? How many companies will hire the arbitrator that is pro-consumer?

He says exactly that in his comment. There is no law stopping them from doing it.

You are right, on re-reading the intent is clear.

In my haste, I read that as "there is nothing stopping them from being pro-consumer, so there is no reason to assume that the judgements favour the businesses" for some reason.

There _are_ ways to set up arbitration to be reasonably neutral if that's a goal.

One contract along those lines that I saw basically goes like this: each party picks its own arbitrator (presumably biased toward that party, whatever). Then those two arbitrators together select a third arbitrator, who will actually arbitrate the dispute.

Of course that's not what binding arbitration clauses look like, at all.

Note that arbitration clauses obviously do not sign away your right to sue, they just force you to put in a decent effort to go through arbitration first.

> How many companies will hire the arbitrator that is pro-consumer?

Are the arbiters really hired by the company?

Generally, the company lists specific approved third party arbitration administrators as part of the arbitration clause, and that administrator is in charge of picking a specific arbitrator for a case. There’s only a handful of large arbitration associations and one of those is usually picked for most contracts. If you piss a business Off too much, they’ll remove you as an approved administrator and that can hurt. A lot. So you can’t be too pro-consumer. But also, if you show provable bias, the arbitration can be thrown out. So it’s really a fine line around callous indifference that leans towards the business, rather than outright anti-consumer.

As for the hiring part - the business pays most of the arbitration fees, but the consumer is on the hook for a nominal amount plus any attorney fees and potentially extra costs like expert testimony.

Yeah... I can see how third party arbitration can work well between corporations that each have a legal department making sure a reasonable arbiter is picked, but I'm much less hopeful about whenever a single consumer randomly ends up in this situation.

So basically the credit rating agencies scenario all over again.

Arbitration can make sense in an international setup with contracts between large companies. For example, if an American company does business with a Russian company, they might agree to do arbitration in the UK in case of a dispute.

However, what Amazon does here is just wrong.

> Arbitration, just like plea deals, are an obviously terrible idea that is legal almost entirely because it reduces the cost of having trials.

Arbitration is legal because of freedom of contract.

There is nothing "obviously terrible" about arbitration per se. When it is included in a freely negotiated contract between parties of equal bargaining power it is hard to find anything wrong with it.

The problem is when the parties do not have anywhere near equal bargaining power.

Arbitration is legal because of the Federal Arbitration Act of 1925. Before that, judges in the United States treated arbitration clauses as unenforceable despite freedom of contract. [1] It’s a bit odd that 80 years or so passed before consumer arbitration clauses suddenly became ubiquitous in the last decade, but nevertheless Congress could easily amend the law if it wanted to.

[1] https://scholarlycommons.law.case.edu/cgi/viewcontent.cgi?ar...

I mean, it's legal because no one has made a law against it. "Freedom of contract" isn't absolute - you can't sign yourself up as a slave. Consumer arbitration could be banned too.

I'm talking about consumer arbitration, which is as you say, inherently unbalanced. Yes, I'm sure there are situations where it's a good tool and I'm not saying ban arbitration completely, but right now we can see the damage from it being misapplied.

The ostensible reason for them is that "court is expensive"; if this were true, and impartial arbiters could be found, at the moment a lawsuit was required, both parties could agree to arbitration at that time: just because you are or have filed a lawsuit shouldn't suddenly mean that arbitration is more expensive or impossible.

That is, there is no benefit to agreeing to it at contract inception, if it were as stated: cheaper and impartial, i.e., a better court.

You can't really expect to maintain equal bargaining power when you're in the business of signing away your rights. I mean, what you've said makes sense if you only have one relationship with one other entity. If there are more parties involved, your loss of rights in one fair bargain may translate to a loss of fairness in another.

>Arbitration is legal because of freedom of contract.

Indentured servitude is just contracting. Do you think it should be legal too?

I think my point may have not been clear. I was responding to someone who offered a theory that it is legal because it reduces the cost of having trials. The implication is that it was decided at some point that we should allow it.

My point is that because it is implied by freedom of contract, it is by default legal until we decide to make it illegal.

> it is by default legal until we decide to make it illegal.

No, it's legal because of the Federal Arbitration Act passing in 1925. Prior to that, waiving of such rights "in advance by agreement" was explicitly disallowed, as SCOTUS determined in Insurance Company v. Morse (1874).

Plea deals are very grey areas that are susceptible to misuse, but it's also the key to moving up a chain of leadership to "take the head off the snake" often.

Deals that involve informing are a very different animal, in my opinion. I'm talking about the much more mundane, everyday case where it is just getting a lighter sentence in exchange for pleading guilty. There is a clear trend where prosecutors push for insanely overdone charges, then drop it to virtually nothing in the plea deal.

This is terrible because it leads to unjustly excessive punishment for smaller crimes if someone wants to exercise their right to trial, and people being told to just take the deal when innocent because a 1% chance of 10s of years of prison just isn't worth the risk when the alternative is you are out in months, for example.

The incentive to save money exists regardless and nowise leads to arbitration as the only option.

I'm not sure what you are saying. My point was that political support for allowing consumer arbitration to exist is increased (despite it being largely unpopular with the public), because it reduces court cases which is cheaper for the government. You are saying that there is incentive to save money, but it doesn't at all affect politician's opinions on consumer arbitration?

I'm saying consumers will already choose arbitration if it achieves the same utility, because it's cheaper for them as well. If politicians were not in the pockets of lobbyists they would see that human nature already saves the government money. I argue politicians are not motivated by saving the government money, at all -- seriously, when have they ever been?