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Consumer Arbitration Agreements: 1.4.5 Secrecy in Arbitration

Arbitration largely takes place in secret, with most arbitration clauses and the rules of most arbitration providers requiring that all parties to a dispute keep all facts about both the dispute and the arbitrator’s resolution of the dispute “confidential.”31 In addition, “[a]rbitrators have no obligation to the court to give their reasons for an award,”32 and it is common for arbitrators to provide no written explanation for their decisions.33

Consumer Arbitration Agreements: 1.4.2 One-Sided Nature of Arbitration

Creditors and merchants favor binding arbitration for several reasons and, in almost every case, these reasons are why the consumer or worker will want to avoid binding arbitration.7 One of the main reason corporations want to arbitrate disputes is that arbitration often dramatically reduces companies’ exposure to large damage awards, even when the companies engage in widespread patterns of egregious wrongdoing.

Consumer Arbitration Agreements: 1.4.7 Arbitration Fees

The American Arbitration Association (AAA) and JAMS, if they consider an arbitration covered by their consumer or employment protocols, will limit the consumer or worker’s arbitration costs to a few hundred dollars. Some arbitration agreements also limit the individual’s arbitration costs.

Consumer Arbitration Agreements: 1.4.3 Limitations on Class Actions

Most arbitration clauses in use in consumer and worker contracts explicitly prohibit individuals from bringing or participating in class actions either in court or in arbitration.14 According to the CFPB’s study, across all of the products studied, between 85 and 100% of arbitration clauses included such class waivers.15

Consumer Arbitration Agreements: 1.2.3 Companion Material

The digital edition of this treatise includes a large number of briefs, pleadings, sample arbitration agreements, statutes, court decisions, and other items as companion materials. This companion material is searchable with the use of keywords and filters.

Consumer Arbitration Agreements: 1.4.8 Other Concerns

Arbitration decisions need not comport with applicable law. Because the FAA provides a party with a sharply circumscribed ability to appeal a decision maker’s erroneous interpretation of the law,44 arbitrators may effectively ignore state or federal worker and consumer protection statutes and judicial precedent.

Consumer Arbitration Agreements: 1.4.6 Limitations on Discovery

One of the most compelling advantages of an arbitration proceeding for a business is that it limits the worker or consumer’s ability to engage in discovery.36 A key benefit, as companies are often as concerned with public exposure of the nature of their practices as with a monetary verdict.37

Consumer Arbitration Agreements: 1.4.4.1 Repeat Player Bias

There are good reasons to be concerned about an arbitrator’s potential bias in favor of companies and against individual workers or consumers.19 Private arbitration companies compete to be selected by corporations in their standard form contracts with consumers and employees. Arbitration work is often very lucrative, and arbitrators know that if they rule against a corporate defendant too frequently or too generously (from the standpoint of that corporation), they will lose the work.

Consumer Arbitration Agreements: 1.2.4 Authorities Cited in This Treatise

While the primary focus of this treatise is on binding arbitration agreements in the consumer and employment contexts, arbitration clauses are extensively used to bind medical patients, nursing home residents, and others. This treatise will cite to such other court decisions involving arbitration, because the principles that they establish are generally applicable in the consumer and employment setting.

Consumer Arbitration Agreements: 1.3 Definition of Predispute Binding Arbitration Agreement—or “Forced Arbitration” Agreement

Arbitration is only one of a wide variety of alternative dispute resolution (ADR) mechanisms. For example, mediation is another form of ADR, but differs substantially from arbitration. A mediator attempts to facilitate an agreement between the parties, while an arbitrator actually decides the case. Mediation does not prevent the consumer from bringing an action in court.1

Consumer Arbitration Agreements: 1.5 CFPB Study of Consumer Arbitration

The leading study of consumer arbitration is the Consumer Financial Protection Bureau (CFPB)’s Arbitration Study (March 2015) on the use of predispute binding arbitration clauses in a number of different industries, including payday lending, credit cards, banking, and prepaid cards.53 Congress required the CFPB to conduct the study and to report to Congress concerning the use of predispute arbitration clauses in consumer finance contracts

Federal Deception Law: 6.2.1 Purpose; Liberal Construction

Congress enacted the TCPA in 1991.13 When it enacted the statute, Congress made findings that automated calls and prerecorded messages are a “nuisance,” an “invasion of privacy,” and “when an emergency or medical assistance telephone line is seized, a risk to public safety.”14 The legislative history also shows a strong concern by Congress to provide a means of individual redress for wrongs inflicted by the undesirable business practices at issue.15 The

Federal Deception Law: 6.2.2 General Scope of the TCPA; Comparison to the FTC’s Telemarketing Sales Rule (TSR)

Since telephone lines are part of an aggregate interstate system even when used for intrastate calls, Congress has authority to regulate intrastate calls.18 Accordingly, the TCPA applies to both interstate and intrastate calls.19 In this regard, the TCPA is broader than the FTC Telemarketing Sales Rule (TSR), which applies only to telemarketing campaigns that involve more than one interstate call.20 The prohibitions in section 227(b)(1), which include th

Federal Deception Law: 6.2.3 Preemption

The TCPA does not occupy the field of robocall regulation.33 It provides that it does not preempt state laws that impose more restrictive intrastate requirements on, or that prohibit, junk faxes, autodialers, artificial voice messages, or telephone solicitations.34 The Seventh Circuit has given this language its plain meaning and held that it leaves states free to restrict or prohibit both intrastate and interstate artificial voice ca

Federal Deception Law: 6.3.1 Nature and Scope of the Prohibition

Unless the called party has given prior express consent, the TCPA prohibits using an automatic telephone dialing system or an artificial or prerecorded voice to make any call to (1) an emergency telephone line,97 (2) a patient or guest room at a nursing home, hospital, or similar health facility, (3) a pager or cellular phone, or (4) any telephone service for which the called party is charged for the call.98 The statute and regulations have been upheld against variou