It wasn’t very long ago that General Mills — manufacturer of dozens of familiar food brands such as Cheerios, Betty Crocker and Pillsbury — raised hell when it changed the legal terms on its website requiring all disputes related to the purchase or use of any of its products to go through mandatory arbitration for resolutions. Consumers were outraged that engaging with the company online– whether by using their website, joining their online community, subscribing to email newsletters, or even downloading a coupon– could make them lose their right to sue General Mills for any future wrongdoing.
After copious pressure, General Mills caved. They reversed their position, but still hundreds of large corporations are subjecting consumers to forced arbitration in their terms and conditions. Clauses are even present in employment contracts.
What is Forced Arbitration?
Arbitration is an alternative method of resolving legal disputes in which two or more parties present their sides of a complaint to a “neutral third party” or “neutral panel” outside of a courtroom. There is no judge or jury; it is this “neutral” party who then decides, after hearing both sides, what the proper course of action should be. There is also no way to appeal the decision reached.
Many cases of arbitration involve parties that all mutually agreed to the arbitration. It is increasingly common for personal injury complaints to be resolved this way; it is just one of several avenues you can take to resolve your case, provided you are given the option.
Forced arbitration clauses are present in the fine print of contracts for everything from car loans and student loans to leases, credit cards, checking accounts, insurance contracts, and even nursing home agreements. If you have ever purchased on Amazon, Groupon, paid a Netflix subscription or obtained cell phone service through any of the big providers, you have signed an arbitration clause and may not even know it.
Effects on Consumers
Proponents of arbitration always try to spin it as a low-cost, informal alternative to lawsuits. They purposely mislead consumers by emphasizing there is no requirement for their representation by an attorney. Surely, a company like General Mills could afford to and would bring their own attorneys to arbitration had they