We here at FindLaw always like to remind our readers how important it is to read the fine print. If you’re buying, selling, or downloading anything, you must understand the terms and conditions of whoever you’re dealing with.

What Is the Difference Between Arbitration and a Lawsuit?

Arbitration is a form of alternative dispute resolution instead of a lawsuit in court. In the arbitration process, the parties meet with an impartial third-party judge. Like a lawsuit, the sides can present evidence and witnesses, and the arbitrator’s ruling is binding.

Over the years, many companies have increasingly relied on arbitration instead of allowing customers to file lawsuits. They put clauses in their terms of service stating that by using the company’s product, the consumer agrees to use binding arbitration to settle any disputes. In fact, a 2019 study in the UC Davis Law Review found that 81 out of the biggest 100 companies in the U.S. include binding arbitration in their terms and conditions.

Companies argue that arbitration is a cheaper, faster way for consumers to resolve their complaints. Whether arbitration is fairer for consumers is another issue. Arbitrators do not have to rely on case law, and discovery of evidence rules can be different as well. Arbitration claims are also individually resolved, denying consumers the ability to band together in a class-action lawsuit. Consumer advocates allege that companies use arbitration specifically to rig the game in their favor.

“Companies thought they were getting out of liability altogether, now they’re seeing exactly what they bargained for, and they don’t like it,” Chicago attorney Travis Lenkner, whose firm filed the majority of claims, said to the Wall Street Journal.

What Does It All Mean?

However, we will note that the company’s terms still say that you waive the right to a jury trial. That means the outcome will be in the hands of a judge and not a jury.

  • Find a Consumer Protection Attorney Near You (FindLaw’s Lawyer Directory)
  • Learn More About the Arbitration Process (FindLaw’s Learn About the Law)
  • Don’t Have Time to Read the Terms of Service? Here’s a Tip (FindLaw’s Technologist)
  • Online Shopping: What’s Buried in the Fine Print? (FindLaw’s Law and Daily Life)

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