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Consumers Should Be Wary of Forced Arbitration Clauses

By June 10, 2014July 5th, 2018Commercial Litigation & Class Actions

A large cereal company recently tried to bowl you over and take away your legal rights. Fortunately, an outpouring of consumer criticism put a stop to that.

Earlier this year General Mills posted on its website new legal terms forcing customers who had disputes with the company into binding arbitration, rather than the courts, to resolve the issues. Any person using their websites, downloading coupons, subscribing to company newsletters or entering company sweepstakes was subject to the restriction.

When word of this became public through social media and traditional media channels, consumers hit back hard at General Mills. Enough so that the cereal maker rescinded its policy, but not before a company spokesperson, referring to forced arbitration, reportedly said, “Many companies do the same thing, and we thought it would be helpful.”

Forced arbitration is indeed helpful – to companies but not to consumers.

Class Action Lawsuits Can Help Those Who’ve Been Hurt by Companies

Forced arbitration mandates that consumers forgo their legal rights to resolve a dispute. The General Mills spokesperson was right about one thing. More companies are indeed adding forced arbitration clauses into their customer contracts.

Forced arbitration typically prohibits class action lawsuits. In class action litigation, a large number of consumers may have small economic damages. It probably wouldn’t be economically feasible, then, for the individuals to pursue litigation on their own. Arbitration can be expensive, too.

Benefits of a Consumer Class Action Lawsuit

A class action lawsuit can cost-effectively provide financial compensation to a broad group of individuals experiencing similar harm. In addition, a successful class action lawsuit can stop a company from selling a defective product or acting badly in other ways. Another GM – General Motors – is the subject of numerous class action lawsuits over its defective ignition switches, including one brought by Gray, Ritter & Graham on behalf of consumers.

Consumers must be ever vigilant in protecting their rights. Those who feel they have been treated unfairly or deceptively by a large corporate may want to meet with an attorney to explore their legal options.