This is nothing new people, just being spread as a cost/cap measure by corps. They are everywhere now and the end result is usually not as advertised, to wit, the following. This particular excerpt is an answer to a consumer question. Just Google "Mandatory arbitration clause," and start reading. That is what this is.
Forced arbitration clauses hide in consumer contracts, but bills in Congress would give consumers more choice: Sheryl Harris
"...The Answer: The mandatory arbitration clauses you've spotted are tucked into all sorts of contracts, and they are drawing heavy fire from consumer groups and from Congress.
When employees and consumers sign contracts that require binding arbitration of disputes, they are surrendering their right to go to court to resolve even serious disagreements.
Binding arbitration carries some distinct pitfalls for consumers. Because the company chooses the arbitration forum and rules, upfront costs for consumers can be prohibitively high. Decisions, even ones that run counter to law, often are protected from review by courts. And while parties in court cases can demand important behind-the-scenes records through discovery, those in arbitration don't have the same access.
Consumer groups charge that arbitrators have an incentive -- namely, a desire for repeat business -- to side with the company rather than the consumer..."
http://www.cleveland.com/consumeraffairs/index.ssf/2010/01/forced_arbitration_clauses_hid.htmlThen there's this one:
"Study Finds that Firms That Use Arbitration Clauses in Consumer Contracts Often Do Not Use Such Clauses in Nonconsumer Contracts
In "Arbitration's Summer Soldiers: An Empirical Study of Arbitration Clauses in Consumer and Nonconsumer Contracts," Theodore Eisenberg of Cornell, Geoffrey P. Miller of NYU, and Emily L. Sherwin of Cornell report that firms that use arbitration clauses in consumer contracts often do not use arbitration clauses in nonconsumer contracts. Here's the abstract:
We provide the first study of varying use of arbitration clauses across contracts within the same firms. Using a sample of 26 consumer contracts and 164 nonconsumer contracts from large public corporations, we compared arbitration clause use in consumer contracts with their use in the same firms' nonconsumer contracts. Over three-quarters of the consumer agreements provided for mandatory arbitration but less than 10% of the firms' material nonconsumer, nonemployment contracts included arbitration clauses. The absence of arbitration provisions in nearly all material contracts suggests that, ex ante, many firms value, even prefer, litigation over arbitration to resolve disputes with peers. The frequent use of arbitration clauses in the same firms' consumer contracts appears to be an effort to preclude aggregate consumer action rather than, as often claimed, an effort to promote fair and efficient dispute resolution. Other common features of civil litigation reform discussion, avoidance of juries and loser-pays attorney fee rules, find little support in the pattern of contractual terms we observe..."
http://pubcit.typepad.com/clpblog/2008/06/study-finds-tha.html And this:
"Pre-dispute binding arbitration clauses in consumer contracts are the single biggest threat to consumer rights in recent years, a de-facto rewrite of the Constitution that undermines a broad range of consumer protections painstakingly built into law. Worse, much of the damage is literally taking place in the small print of everyday life and thus 'flying under the radar' of public and news media perception."
Harsh but literal words of the press release published on March 24, 2004 by the National Consumer Law Center announcing the release of the the Center's Arbitration Update. Mandatory consumer arbitration is not a recent phenomenon in the United States. However, while no one really seems to advocate against arbitration conceptually as a valid alternative to litigation, there appears to be growing disenchantment and criticism of mandatory arbitration programs that provide consumers with no option but to submit dispute resolution to arbitration.
So what? some may wonder. In a nutshell, consumer contracts can rarely be the subject of bilateral negotiations vis-à-vis a consumer who has to either accept all terms and conditions in their entirety, or find a similar service elsewhere not containing an ADR provision.
Again, so what? As the National Consumer Law Center argues in its Arbitration Update 2004, mandatory arbitration programs are more often than not entirely too one-sided, as businesses that propose arbitration to resolve consumer disputes (i) have already and unilaterally chosen the ADR service provider, (ii) have probably devised a set of rules specifically suited to themselves, (iii) probably have even designated a fixed roster of neutrals, (iv) demand that confidentiality be kept by consumers, and (v) seriously limit consumers' redress in a court of law..."
http://adrresources.com/adr-news/161/us-pre-dispute-binding-arbitration-clauses-consumer-contractsI will leave you to your own conclusions
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