arbitraryacct

The $1500 doesn't go to the customers, it goes to the courts. It's effectively a fine that a customer can arbitrarily impose on a company.

"this could definitely get ugly for companies that misbehave"

It doesn't just have to be companies that misbehave. If you don't like your competitor, maybe you'll sponsor that $250 per user to allow their userbase to throw arbitrations at them.

You can burn your competitor down at a ratio of at least 1:5 if you do something like this. If you take some fees for every case you win or that ends up settling, the ratio will be far better than 1:5

The arbitration system as it stands is a tool that allows anyone with enough money and intention to smite any company by pulling together unhappy users and paying arbitration fees for them.

Not allowed

Yes, when you file an arbitration against a company, regardless of how legitimate your filing is or how likely it is to be thrown out of court, that company is out at least $1000. If you wanted, you could pull together 10,000 HN users to file arbitrations, and HN is going to be hit with a $10M hammer regardless of whether there is any legitimacy to the claims.

I believe the amount varies state to state, but is generally over $1000

Arbitration is extremely disruptive. If someone takes you to arbitration, you pay $1k non-refundable, simply because they want to take you to court.

If you do end up in court, it's another $20k just for JAMS fees. Again, non-refundable, doesn't matter if you win or lose.

So if someone is trying to take you to arbitration over less than $20k, it really doesn't matter AT ALL if they are right or not, it makes sense to settle for whatever amount you can convince them to agree to.

You can kill a company with frivolous arbitrations, just by having enough people willing to file one. Doesn't matter if those people have been wronged.