Published on October 25, 2023 by Max Kornblith
An analysis of two years of data from the nation’s largest arbitration venues shows that among consumer arbitrations that were completed pro se, meaning without representation of an attorney, two-thirds were brought with the assistance of FairShake’s online platform.
A review of the data also reveals massive increases in the number of arbitration cases being filed, though the number of Americans receiving compensation through the system remains low.
FairShake analysis finds that of the over 14,500 consumer arbitration cases resolved in 2022, only 612 (4%) resulted in a judgment in favor of the consumer. Another 8,594 cases (59%) were settled before a hearing or verdict, meaning the terms on which they were resolved were not publicly disclosed. Meanwhile 852 consumer cases (6%) were resolved in favor of the business on the other side, 936 (6%) were dismissed on the merits, and 3,583 cases (25%) were dismissed on the basis of administrative issues.
In addition to the completed cases, nearly 77,000 cases were closed in 2022 upon being withdrawn by the consumer who filed them. Withdrawn claims were primarily filed by individuals represented by the law firm Keller Postman against TurboTax and Amazon. (Removing these claims, 8,574 other consumer arbitration claims were withdrawn in 2022).
Arbitration claims closed in 2022 typically took between four months and one year longer to adjudicate than did claims resolved in the prior year. This was largely attributable to the volume of withdrawn claims in 2022, although time to resolution has trended up over time for other outcomes as well.
Further findings from the data are included at bottom.
Arbitration is the final legal escalation option within billions of consumer and employment contracts. The volume of contracts naming arbitration has soared over the past decade since most opportunities for class action lawsuits were curtailed by Supreme Court precedents and corporate contract rewrites. While consumer and employment rights advocates have decried the rise of this private justice system as removing checks on large-scale corporate wrongdoing, business groups have touted the benefits of arbitration’s supposed informality and speed.
Contrary to this consumer-friendly messaging, though, in recent years companies have been adding unprecedented delays and other procedural hoops to their contracts’ dispute resolution procedures that deter arbitration actions. These have included special rules for mass arbitrations — those where large numbers of individuals bring similar claims — some of which have been struck down by courts as improperly corporation-friendly.
The consumer and employment arbitration space continues to rapidly evolve given these contract changes, the rise of mass arbitration actions and procedures, and regulatory and legislative actions that restrict arbitration of certain disputes (such as claims by service members against financial institutions, and by employees with sexual harassment claims against employers).
FairShake believes it should be easier for American consumers and employees to exercise their rights both individually and en masse, and that laws, regulation, and legal precedents have not kept pace with corporate tactics that hold consumers and employees back from seeking justice and appropriate compensation.
FairShake, an Oakland-based startup, is focused on increasing access to the consumer justice system, starting with the consumer arbitration process. FairShake has been covered by the New York Times, USA Today, and others, and was named a Best Invention of 2020 by TIME.
For more information please contact:
max [at] fairshake.com
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