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Thursday, May 17, 2018


Jeff Sovern

The available evidence indicates that consumers don't bother filing for arbitration when small amounts are at stake. I'm not aware of any reason to think that consumers seek arbitration for small amounts when they have meritorious claims, or alternatively that small claims lack merit as a general matter. I'm not sure how much can be learned about arbitration from the single case described in the article, but even assuming that that case is typical of arbitration, the consumer's $2,000 in damages (ignoring the punitive damages) are somewhat larger than those suffered by consumers in many of the claims that the research shows arbitration suppresses.

Ted F

Exactly. Arbitration agreements protect against meritless lawsuits designed to benefit attorneys. Not so much against meritorious claims.

Gregory Gauthier

The article also describes the "outcome of a recent arbitration proceeding," in which the consumer was awarded $2,000 on a TILA claim, $50,000 in punitive damages, $49,917.50 in attorney's fees, and $2,979.16 in expenses for a total recovery of over $100,000. The author's takeaway is that "an arbitration agreement won’t do you a whole lot of good if your underlying businesses practices violate the law" and that "If word of successful claims like this one spread to other consumer lawyers, we may well see the frequency of consumer-initiated claims rise."

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