Mandatory Binding Arbitration and Alternative Dispute Resolution

Background

Many businesses, including financial institutions, require consumers to submit future disputes to mandatory binding arbitration as a necessary condition for doing business. They also typically prohibit class actions A class action combines the claims of all the people injured by a particular policy or practice into one lawsuit.  . This means that consumers have no choice but to pursue individual claims in arbitration (see also Chapter 12, Personal and Legal Rights - Mandatory Binding Arbitration policy as well as Class Action policy).

MANDATORY BINDING ARBITRATION: Policy

Ensuring effective access to redress

In this policy: Federal

Consumers should have access to effective redress with adequate recovery. They should have the right to pursue their claims in court on an individual or class basis.

Pre-dispute mandatory binding arbitration and class action A class action combines the claims of all the people injured by a particular policy or practice into one lawsuit.  waivers should be prohibited.

Consumers should have the right to bring a private cause of action for treble damages.

State law should allow a minimum recovery of at least $2,000 per consumer for each offense, indexed for inflation.

A defendant should be required to pay a consumer’s attorneys’ fees and costs if the consumer prevails in the action.