Consumer Arbitration

As an everyday consumer, you have rights and options when it comes to resolving disputes with businesses and merchants in the marketplace. One of the most common ways to resolve these disputes is through consumer arbitration. But what exactly is does that mean? And how can you ensure that your rights are protected and that you come out on top? In this article, we will delve into the process of consumer arbitration and provide insights into choosing the right lawyer, understanding governing laws and regulations, navigating major provider services, identifying potential pitfalls, and developing winning strategies. We will also discuss the role of the FAA and Supreme Court Rulings in shaping consumer arbitration processes. Read on to learn more about how to become stronger consumer advocates and how you can protect them through effective advocacy strategies.

How do You Choose a Consumer Arbitration Lawyer?

Choosing a lawyer for your specific consumer arbitration issue should include: (i) their focus practice of law, (ii) legal background, and (iii) approach to consumer advocacy. Specific consumer laws require multidisciplinary approaches and unique strategies. Also, evaluate their overall communication style, availability, and success rate in resolving disputes.

Understanding Consumer Arbitration

Parties involved in arbitration agree to resolve disputes outside of court, waiving their rights for court resolution. Many people who find themselves in arbitration are usually up against specific industries that are regulated by state law and government agencies. For example, the financial industry, credit card companies, payday loans, and everyday financial products often include alternative dispute clauses, which make it far more common for consumers to be directed through this process rather than small claims, civil trials, and class-action litigation.

The reasons behind many of the arbitration provisions are numerous–but the most simplistic explanation comes down to industry norms. Some businesses deal in so many transactions (like credit card issuers) that the amount of disputes would amount to too many cases in our courtrooms. Policymakers in Washington, Congress, and industries band together as trade groups and attempt to design more accessible and user friendly options to bind parties to decisions made by neutral parties (an arbitrator). While some will criticize the general nature of things, it seems that the norm will continue far into the future as businesses and individuals look to getting results faster and more efficiently than courts can provide. Important agencies such as the Consumer Financial Protection Bureau (CFPB) create incredible guidelines, enforce laws, and provide immensely valuable reports that educate individuals who are subjected to so many alternative dispute provisions regarding services and products involved in everyones lives.

The Role of the FAA and Supreme Court Rulings

The regulation of consumer arbitration agreements falls under the jurisdiction of the Federal Arbitration Act (FAA). In consumer cases, the FAA governs the enforceability of these clauses, ensuring that they are valid and binding. Additionally, Supreme Court rulings have consistently supported consumer arbitration clauses, affirming the mandatory nature of such agreements. This has resulted in upholding the use of various alternative dispute clauses in various consumer contracts. Furthermore, the FAA preempts state laws that seek to impose limitations on the inclusion, enforcement, and use of arbitration clauses within commercial and common agreements.

The Process of Consumer Arbitration (AAA & JAMS)

Initiating a consumer arbitration case involves choosing a service provider, such as the American Arbitration Association (“AAA“) or JAMS, for the administration of the dispute. The selection process includes an agreement on a neutral arbitrator to administer and oversee the case, ensuring adherence to the due process protocol and rules of evidence governed by applicable law. It’s essential to consider the governing provision and agreement while understanding the implications of mandatory clauses. Many find out (too late) that the contract terms from the onset of the transaction survive well into the life of the case and may come back to haunt either party–most notably the prohibition against combining parties for a class action lawsuit. The overall process (whether administered by AAA or JAMES) provides a structured approach to resolving future disputes related to most consumer products and services, giving people a better chance at equitable dispute resolution without getting embroiled in complex litigation processes.

Initiating a Case with Major Arbitration Services (“the Clause”)

Before any case can even be initiated, you should first look whether you have a contract clause provision that provides for alternative dispute resolution and the time period required. Initiating a case involves filing fees, demand or claim documentation, and assigning a case manager to administer the entire process from start to finish. The selection of an arbitrator and presenting evidence must align with the rules of the service provider. The choice to move forward with your dispute should not be taken lightly. Some individuals who stood up for their rights became celebrated whistle blowers that ended up helping millions of people.

Rules of Evidence and Governing Laws

The administration of consumer arbitration in the United States is governed by the Federal Arbitration Act. But these rules rarely come into play once a matter is initiated by your or your attorney. More often, the service provider you will be governed by will have their own set of rules–which fall under the provider’s published “consumer arbitration rules”. Unlike courts, arbitrators have more discretion when it comes to admitting evidence, and consumers may benefit from this greatly. Additionally, certain states have enacted laws offering increased protections for consumers engaged in alternative dispute, emphasizing the significance of thoroughly reviewing applicable agreements before signing to understand the limitations it may impose on rights and options.

Pitfalls in Consumer Arbitration

Pitfalls in consumer arbitration can be numerous and daunting. Lack of transparency in the private proceedings leaves people uninformed about how to present evidence (such as exhibits and declarations) and the ultimate decision-making authority of the arbitrator. The limited remedies, biased arbitrators with financial incentives, and difficulty in appealing decisions further stack the odds against individuals who are not engaged in regulatory disputes. Mandatory arbitration clauses in contracts only exacerbate the situation, making it arduous for consumers to seek legal recourse through the court system. These challenges highlight the need for greater protection and fairness in the consumer process and overall education in legal rights.

Unforeseen Challenges and How to Overcome Them

Consumer arbitration involves unique challenges that people unfamiliar with alternative dispute resolution (ADR) may encounter. These challenges include a lack of transparency, limited options for appeal, and potential bias towards companies. To overcome these hurdles, self-represented parties can research the arbitrator’s reputation and experience, negotiate for a fair process, and consider alternative dispute resolution options. In cases where someone feels their rights have been violated in the process, they have the option to file a complaint with the administration forum or seek legal counsel. By understanding these challenges and employing effective strategies, individuals can navigate arbitration more effectively and protect their rights in financial services disputes.

Arbitrator Impartiality Concerns, Costs, and Fairness

When considering consumer arbitration, it’s essential to address the impartiality concerns and costs involved. While this route can offer a quicker and more cost-effective resolution compared to court proceedings, critics have expressed apprehensions about the fairness of arbitrators and the lack of transparency in the process. It’s crucial for individuals to thoroughly review contracts containing these clauses, as they may impact the option to pursue legal action. Additionally, some might have the opportunity to opt-out entirely or pursue a class-action lawsuit. Being aware of these possibilities can better equip individuals facing future disputes.

Winning Arbitration Strategies

Understanding the overall process and your rights as a consumer is crucial for navigating the alternative dispute system effectively. Documenting everything and keeping track of important deadlines will help you stay organized and prepared. You may want to consider hiring an attorney or using a legal service to represent you, as their expertise can significantly benefit your case. Building a strong case and gathering evidence to support your claim is essential for a favorable outcome. Additionally, negotiating a settlement before going to arbitration, if possible, can save time and resources.


In conclusion, consumer arbitration can be a complex process, but with the right knowledge and guidance, you can navigate through it successfully. Choosing the right lawyer is crucial to ensure that your rights are protected and that you have the best chance of achieving a favorable outcome. Understanding the intricacies of your service provider, including the role of the FAA and Supreme Court rulings, is essential for building a strong case. Being aware of the potential pitfalls, such as unforeseen challenges and impartiality concerns, will help you prepare effectively. Finally, implementing winning strategies, including thorough documentation and expert representation, will increase your chances of a successful resolution. If you find yourself in a consumer dispute, don’t hesitate to seek professional assistance to protect your rights and explore all available options.