Just Desserts

The explosion of arbitration clauses in business contracts, and the Supreme Court's enthusiastic embrace of keeping ordinary folks away from fair courts, has led to a situation where there is often no recourse for people cheated by businesses.

People have now created companies that automate the application for arbitration, completely overwhelming the ability of the companies, and the arbitrators, to process:

For years, AT&T worked tirelessly to erode its customers' legal rights, using mouse print in its terms of service preventing consumers from participating in lawsuits against the company. Instead, customers were forced into binding arbitration, where arbitrators, chosen and paid by the companies under fire, unsurprisingly rule in favor of companies more often than not. Initially, the lower courts derided this anti-consumer behavior for what it was, noting that however brutally flawed the class action is, binding arbitration, at least the way we let companies designed it, in many ways made things worse.

But these lower court roadblocks quickly evaporated when the Supreme Court ruled in 2011 (Mobility v. Concepcion) that what AT&T was doing was perfectly OK. While lower courts saw this as an "unconscionable" abuse of consumer rights and the law, the Supreme Court bought into the ongoing myth that binding arbitration is a hyper-efficient, modern alternative to class actions. In reality, it shifted things to a form of binding arbitration that was costly, lopsided, and cumbersome for consumers, and less transparent for those used to visiting Pacer to dig up legal histories.

Fast forward to a few years ago, when a growing number of companies and services (like Fairshake) began streamlining the arbitration process, making it easier and less expensive for consumers (and yeah, class action lawyers). This shifted the balance of power back toward consumers, and starting in 2018 or so companies like Uber, AT&T and Comcast began to complain they were being swamped with arbitration feuds. Now, a year later, even giants like Amazon are being forced to take consumer complaints back to the courtroom, in part because a system they constructed to dodge accountability is no longer helping them do that:

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In short, corporations (beginning with AT&T) spent the better part of the last decade fighting for an arbitration system that resulted in fewer payouts, fewer successful complaints, and less overall transparency. And while happy about that initially, the second the internet and technology shifted the balance of power in the other direction, they were eager to flee back to the devil they knew. It should be curious to see if other giants like AT&T also begin stripping binding arbitration out of their end user agreements, or if this is just a temporary setback on the path toward less accountability.

By way of example, Uber has had 12,500 requests for arbitration filed, and it has refused to start the process, which is now being litigated, and Amazon has thrown in the towel, and is allowing customers to file in court:

Amazon.com Inc. has stopped requiring customers to pursue claims in arbitration -- rather than a court of law -- after tens of thousands of people inundated the company with complaints that the Alexa digital assistant was improperly collecting voice recordings.

Amazon’s terms of service, which govern everything from buying products on the company’s web store to using its consumer gadgets, now lets customers file class-action suits against the company in state or federal court. Previously claimants had to enter arbitration as individuals. All cases must be filed in King County, Washington, where Amazon is based, according to rules that were last updated on May 3.

The change follows the filing of some 75,000 Alexa-related arbitration claims -- almost entirely from people represented by Chicago law firm Keller Lenkner LLC -- in the last 16 months. The cases likely added up to tens of millions of dollars in filing fees payable by Amazon, according to the Wall Street Journal, which reported the move earlier Tuesday.

Companies have created a biased process, and gone as far as possible to convince any litigant that this process is completely unfair so as to discourage filing.

Someone made it as simple as going to a web site, and clicking, "I agree," and now they are clicking their asses off.