Big Problems in Small Print: Forced Arbitration

arbitrationPop quiz! What’s on page two of the last consumer agreement you read?

Can’t do it? You’re not alone. In fact, only 7% of people admit to reading the consumer agreement when they buy a product or sign up for a service. This isn’t surprising, considering that it takes an average of 40 minutes to read through the entire thing! Terms and conditions, warranty statements, handbooks, and other similar consumer agreements are tedious, with small print and complicated jargon. It seems unimportant, especially when you have a new product to try out or a website to explore. But before you toss the consumer agreement aside or quickly hit “agree,” consider the consequences.

Look Carefully

Companies pack a lot of information into user agreements. Unfortunately, they can be sneaky when it comes to vital information. Important clauses are often buried deep within the agreement underneath other less-critical facts.

One clause that often gets hidden among the dense language is an arbitration clause. An arbitration clause states that, in the event of a conflict, the two parties (the consumer and the company) must resolve their dispute through an arbitration process. When a dispute is solved via arbitration, it means that it is settled outside of court. The arbitration clause essentially prevents an issue from going to court. If the consumer has a complaint over a defective product, for example, the arbitration clause serves to protect the company or manufacturer from a lawsuit.

How Does It Work?

When a product is harmful, the arbitration clause presents challenging obstacles. For example, take last year’s exploding phone debacle. One of the consumers injured by the Galaxy Note 7 phone wanted to sue Samsung after suffering severe burns. However, the phone’s warranty guide contains an arbitration clause, allegedly on the very last page of the guide. The clause states that unless the consumer opts out of the arbitration clause within 30 days, all disputes will be settled outside of court. In their specific arbitration clause, Samsung says that they have the right to choose the arbitration, and that the consumer may have to pay for Samsung’s legal fees if he loses. With a clause like this, it’s not looking good for the consumer.

This might not seem fair or ethical, but it’s enough to protect companies against lawsuits. So next time you buy a new phone or sign up for a cool app, remember to look through the consumer agreement, even if it’s just a quick scan for important information. After all, you never know what you might be agreeing to.


The attorneys at Perenich, Caulfield, Avril & Noyes represent those involved in car accidents, motorcycle accidents, bicycle accidents, pedestrian accidents, and other types of personal injury matters. Our firm is one of the oldest personal injury law firms in Tampa Bay. There are no attorneys’ fees or costs unless we prevail for you. Call our office 24 hours a day at 727-796-8282 or simply click here to schedule a free case consultation.


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