The Hidden Cost of Cyber Monday Deals: Forced Arbitration

As Forbes reported this week, “Forget Cyber Monday, It's Cyber Week.” Many companies are extending their online sales all week long, with new deals being introduced every day. But Even the best cyber deals can come with a shockingly hefty price – your constitutional right to hold the retailer accountable in court if it cheats you, delivers a bad product, or loses your personal information in a data breach.  

Whenever you click through Amazon, eBay, or thousands of other online retailers, you might be unknowingly subjected to a forced arbitration clause, which allows the company to kick consumers out of court and instead funnel them into a rigged forum run by an arbitration provider selected by the company. This arbitrator is not required to have any legal training and does not even have to follow the law, but the decision is almost impossible to appeal. And because arbitration is a secretive process, customers and the public will likely not be able to learn of the extent of the company’s wrongdoing.

Forced arbitration clauses are ubiquitous in websites, as the New York Times recently reported, but they are also controversial. In response to the article, American Association for Justice CEO Linda Lipsen published a letter in the Times explaining why she considers forced arbitration one of the greatest threats to American consumers, especially for online shoppers:

“…I have seen forced arbitration clauses in consumer and employment contracts that required the dispute to be decided by a religious official, a Native American tribal council, and in the case of the National Football League cheerleaders suing for wage and hour violations, the commissioner of the N.F.L.” Ms. Lipsen wrote. “Emerging issues like online consumer privacy must be carefully considered in a court of law, not a rigged system designed by corporations that don’t take the necessary steps to protect their customers.”

Is your right to ensure corporate accountability worth less than a great deal on a flatscreen TV?