Consumer arbitration has always been a magnet for controversy, attracting stinging criticisms and adamant rebuttals. Critics complain that it is tilted heavily in favor of the business party, while defenders argue that it is more efficient and cost-effective than litigation. The debate peaked last year when a state attorney general sued the National Arbitration Forum, alleging, among other things, that NAF hid its extensive ties with the debt collection industry. The case eventually settled. Where does this leave consumer arbitration? This article takes a closer look at the issues involved and suggests that there is a way to reconcile the concerns of critics with the benefits of arbitration.
At first glance, the tension between advocates and critics of consumer arbitration may appear impossible to resolve. On the one hand, advocates note that arbitration is generally quicker, cheaper and more predictable than litigation. On the other hand, critics argue that inclusion of a pre-dispute arbitration clause in consumer agreements should be outlawed because it could strip consumers of their rights and create an unequal playing field.