Mandatory arbitration clauses in consumer contracts have been – by most accounts – a boon for the corporations that draft those contracts and a bane for consumers (and litigators on both sides of the aisle). The perception is that mandatory arbitration decreases consumer access to the courts by reducing or eliminating the availability of the class action, that arbitrators used in consumer actions are often not truly “independent” and that fee-splitting provisions, limits on recovery and other procedural devices often result in customers not proceeding with their grievances even when the amount at issue would otherwise justify an individual claim.
To what extent this either prevents or dissuades consumers from being able to enforce their legal rights against the corporations with whom they do business has been a matter of ongoing debate, with consumers and their advocates coming down largely on one side and corporations and the Courts – most particularly the U. S. Supreme Court in AT&T Mobility v. Concepcion, American Express Co. v. Italian Colors and other recent cases – coming down on the other. While this Court has proven perhaps a touch less socially conservative than critics feared, they have been every bit as anti-consumer and pro-business as imagined. For better or worse, SCOTUS appears willing to continue this kind of neo-Lochner hands-off approach to consumer contracts and, because of the preemptive effect of the Federal Arbitration Act, state legislative protections are rendered largely meaningless.