Guest Post From Peter Holland: Forced Arbitration is the Silver Bullet to Kill Consumer Lawsuits, Says Prominent Corporate Attorney

by Peter Holland

In anticipation of the CFPB’s forthcoming study on forced arbitration in consumer contracts, we can expect lots of rhetoric from industry about how arbitration is more consumer friendly than litigation, and that it results in better outcomes (i.e. more money) for consumers.  (If this were really so, then how could a company justify these added losses to their shareholders)?

 It is not often that the general public gets a peek behind industry messaging, so this article and related podcast (especially starting at 8:44) are a particular treat.  Although industry may describe forced arbitration as a consumer protection measure, when talking amongst themselves, they describe it as “silver bullet” which can magically kill consumer claims.  Judge for yourself:

 “What if there existed a single argument that could be made in many consumer cases that would successfully remove the matter from Court and likely end the case in its entirety? 

Surprisingly, such an argument exists, though it is often overlooked in the defense of debt collectors and debt buyers.” 

The answer, according to the author, is to force the case out of court and into arbitration, where the claims will never be pursued because of the cost.  The lawyer in the podcast says that once a court orders arbitration, it is “very rare” a case actually goes to arbitration, and he can only think of 2 cases over the past several years that went to arbitration after the case was stayed or dismissed in court.  One of the reasons he offers is that plaintiff’s attorneys don’t want to spend their own money on arbitration.

So, in the words of one prominent lawyer, industry has a “silver bullet” which kills almost all disputes because of economic barriers and an inability to find lawyers.  Nice system.