"Volunteering" to Arbitrate through Predispute Arbitration Clauses

The Average Consumer's Experience

by Linda J. Demaine, Deborah R. Hensler

Download Free Electronic Document

FormatFile SizeNotes
PDF file 2.3 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

Although private arbitration has long been used in commercial transactions and labor-management relations, specifying arbitration for disputes arising from consumer contracts is relatively recent. Many are concerned that consumers do not fully understand the "small print" in such agreements, which are offered on a take-it-or-leave-it basis. The authors found that although businesses seem to be placing consumers on equal footing with themselves in resolving future disputes, appearances may be deceptive. More than one-third of the clauses do not inform consumers that they are waiving their right to litigate disputes in court; many do not tell consumers what their expenses might be in an arbitration, that the outcome is final and binding, or what the key aspects of the arbitration process are. Additionally, the nature of any interim relief provided is more suited to the business than to the consumer. In short, given the lack of available information for consumers in these arbitration clauses and the difficulty of obtaining and deciphering them, most consumers only become aware of what rights they retain and what rights they have waived after disputes arise. There are thus grounds for concern about how consumers actually fare in arbitration.

Originally published in: Law and Contemporary Problems, v. 67, Winter/Spring 2001, nos. 1 & 2, pp. 55-74.

This report is part of the RAND Corporation reprint series. The Reprint was a product of the RAND Corporation from 1992 to 2011 that represented previously published journal articles, book chapters, and reports with the permission of the publisher. RAND reprints were formally reviewed in accordance with the publisher's editorial policy and compliant with RAND's rigorous quality assurance standards for quality and objectivity. For select current RAND journal articles, see External Publications.

Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.