Federal Government Arbitration Report: Consumers Have No Idea
The Consumer Financial Protection Bureau has issued a huge report on the way consumers respond to pre-dispute arbitration. The report includes a lot of new data showing that pre-dispute arbitration agreements are going right over the heads of the consumers who sign them. Over 1/2 of consumers do not know they have a pre-dispute arbitration agreement when they actually do and over 1/3 of consumers who know they do erroneously think they can still file a lawsuit if a dispute arises.
The federal study cites another study, "Whimsy Little Contracts" where a bunch of people read a 7 page contract that included a pre-dispute arbitration clause. After reading it, only 3% could self-identify that one of the features of the contract was a pre-dispute arbitration agreement. Well more than half could not even remember it when specifically asked about it.
The federal study also finds that there is no evidence that the decreased litigation costs for businesses resulting from widespread use of pre-dispute arbitration agreements lead to cheaper prices for goods and services for consumers.