Published on October 12, 2021
In 2020, more consumers and employees held large corporations accountable by filing claims through arbitration than ever before. This new analysis by FairShake shows that the year-on-year growth rate of arbitration claims increased by 77% in 2020. However, this still only represents a tiny fraction of a percent of the hundreds of millions of American consumer contracts that are covered by the arbitration system.
As millions of Americans transitioned to working from home during the COVID-19 pandemic, the importance of fair consumer contracts that govern our use of essential services like our home internet and payment apps has risen exponentially.
But despite over 85 million eligible claims, only around 14,000 cases were resolved through the private court system which these claims are routed through.
This and other findings come from an analysis by the consumer rights service FairShake, based on data disclosures by arbitration providers the American Arbitration Association (AAA) and JAMS.
In the time since a 2011 Supreme Court decision that ruled, by a 5–4 margin, that corporations could use contracts that disallow class action lawsuits if they included an individual arbitration agreement, corporations have largely forced those with complaints to bring claims individually.
In 2020, no company saw more arbitrations initiated than tax preparation software provider Intuit, which produces TurboTax. The company faced tens of thousands of arbitration requests from taxpayers who said they were misled into purchasing a paid version of TurboTax when they were eligible for a free version based on their income.
Rideshare provider Uber was not far behind, with almost 3x the volume of claims they received in 2019. After Amazon faced 24,200 arbitration demands in 2020 (amounting to tens of millions of dollars in filing fees the company was obligated to pay), the company removed the binding arbitration agreement from their terms of service to allow customers to file lawsuits.
When claims are filed for arbitration, the data shows that companies take them seriously. On the consumer side, 58% of claims were resolved through a private settlement that induced the customer to drop the claim. Compared to 2019, a smaller percentage of claims were dismissed or withdrawn, while a larger percentage of claims were resolved through a private settlement.
Among the largest public awards (which excludes the private settlements), the largest individual consumer awards involved home and equipment rental, pest control, and education companies.
Companies that provide financial services saw the greatest increase in consumer claims in 2020.
When it comes to employment arbitration, the two companies that received the most claims were both dollar stores. Other notable brands that made the list include Chipotle, Kellogg, and Halliburton.
FairShake is the online service giving American consumers the power and leverage to stand up to big companies. FairShake’s online platform and expert team transform the bureaucratic nightmare of a consumer arbitration claim into a simple, supportive online experience. We’ve already helped tens of thousands of Americans achieve fair resolutions in their disputes.
FairShake has been covered by outlets including USA Today, TechCrunch, and The New York Times, and was named a TIME Best Invention of 2020.
For more information please contact:
Alec Foster, Special Projects Lead
press [at] fairshake.com
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