The following is not legal advice but you already know that.
The general public is misinformed, ill-informed, and inadequately informed when it comes to consumer arbitration. I just read a post on Miles to Memories called Chase Changed Their Arbitration Terms – How To Reject This Change & Why You Might Want To. As a consumer arbitration attorney that has beaten, in arbitration, banks like Citi (see Beating Citi in Arbitration, What It Means for You) and telecom companies like Verizon among others, I have to set the record straight and tear apart every point in the blog post.
I’ll go line by line.
- First, the proceedings are private, so if they’ve done something wrong, there’s less publicity. This is misleading. It is irrelevant if the actual proceeding is private. What is more important is that the proceeding is not confidential. The only party that has to keep the arbitration confidential is the arbitrator. The winning party or the losing party can reveal anything about the arbitration including the arbitrator’s reasoning. Indeed, if a consumer wins an arbitration, he or she can have the award confirmed by a court. This makes the result public. From there, it’s up to consumers and the media to publicize the result. If it results in a victory for the consumer then it should be shouted from the rooftops. If it is an unfavorable result for the consumer then, like court decisions, the public can weigh in on the outcome.
- It’s much cheaper because each individual consumer would have to bring legal action against the bank. Here is another incorrect mischaracterization of arbitration. First, in terms of arbitration costs, companies have to pay the filing fee for each arbitration. This is thousands of dollars. In addition, the company has to pay for the services of the arbitrator. Sure, one case is pennies, but how about having to do so for 60,000 clams. That is hardly cheap (see Uber’s Arbitration Addiction Could Be Death by 60,000 Cuts).
- Consumers are generally not going to go to the trouble for a few bucks. This is wrong for so many reasons. To begin, people in the points hobby are the most frugal people I have ever met. Take one point away, one benefit, or one lounge away from them, and they’ll cry, “Lawsuit!” If there’s any chance for points enthusiasts to recover anything, they’ll try. Second, a few bucks multiplied by thousands of claims is not a few bucks. Trivializing claims by saying it’s only a few bucks is how big businesses get away with ripping customers off one by one. Third, what trouble is the author speaking of? All someone who has a consumer dispute is file a notice of dispute directly with the company (or submit an inquiry with Bachuwa Law) and wait for a response. If there’s not a settlement, the consumer can file the arbitration, have the company pay for the majority of the arbitration (if not the whole thing), and present his or her case. That will take months, not years like class actions. The usual result for a claim with merit, lest my disclaimer that prior results don’t guarantee a future outcome, is a healthy settlement. A settlement that’s much better for the consumer than a case of Redbull from a class action (see The Fine Print: No Class-Actions Against Banks? So What). This brings me to the fourth error in the post.
- If there’s a class action it’s not just a few bucks for one consumer, it’s a few bucks for each member of the class and that could be millions of people. First, the general public needs to understand that class actions aren’t easy to file. There is a complex procedure for bringing a class action that isn’t as easy as “a bunch of us got ripped off, that’s a possible class action.” And even if an issue is class-action worthy, the chances that the dispute is not governed by an arbitration agreement these days is slim to none. Like it or not, the Court has upheld arbitration agreements as enforceable time and time again. The only way that this will change is by legislative action, something unlikely to happen in the near future. Next, who wants a few bucks? Consumers should seek all damages allowable under law against companies that behave badly. On an individual basis, this could mean significantly more money than the the class action settlement whereby the lawyers get millions and the consumer gets pennies.
I tried to take a soft approach in an attempt to convert the skeptics about the benefits of consumer arbitration. I used to write frequently for Frequent Miler on the subject. While I made some progress, most remain unconvinced. Here are the usual comments: “Consumer arbitration is a scam.” “We want class action.” “Bachuwa doesn’t know anything.”
This time around, I’m taking a different approach. I’m calling out those who write about a topic they know nothing about and discrediting their misinformation. I’m also urging everyone who has a dispute to file a complaint. I’m asking everyone to publicize the result of his or her claim whether he or she wins or loses. The alternative is to keep bitching about how unfair everything is and hope that companies grow a conscience. How do you think that will go?