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Consumers at a Big Disadvantage When Forced to Arbitration as Compared to Class Action Lawsuit

By July 10, 2013July 6th, 2018Commercial Litigation & Class Actions

According to a recent article in The New York Times, automakers are increasingly trying to get buyers of their vehicles to sign agreements that bind them to arbitration when disputes arise. This can be wrong for consumers, so they should use caution before entering into such an agreement.

Benefits of Consumer Class Action Lawsuits

Consumer class action lawsuits offer several favorable aspects for consumers when compared to arbitration:

· All members of a class have the same legal representation team

· Class action lawsuits are an economical and efficient way to pursue compensation for damages or harm – no matter the size or scope – suffered by a large group of people

· Class action lawsuits not only can provide just compensation to victims but may also stop the negligent practices of the offending company to prevent any future harm

Arbitration Pits Individual Against Large Corporation

In arbitration, individuals are on their own to represent themselves or hire an attorney. Each case is heard and decided separately. This can place sizeable financial and time burdens on individuals.

In addition, since arbitration is a private process – as opposed to the public court system – key details may never be revealed. In an arbitration case with an automaker, for example, information on a defective part or manufacturing process that could affect millions of automobile owners may never come to light.

The decision by automakers and other large corporations to force consumers into arbitration stems from a ruling by the U.S. Supreme Court in 2011 that allows companies to prohibit consumer class action lawsuits by their customers.

But that doesn’t necessarily make it right or equitable.

Congress is considering legislation called to address this inequity. In a nutshell, if passed, it will prohibit agreements that mandate arbitration before a dispute actually occurs. Arbitration will still be available, just not required.

If you or a loved one has suffered economic or physical harm from a defective product or unscrupulous corporate behavior, you may want to consult with an attorney about your legal rights.