Chapter 6 - § 6.3 • ARBITRATION OF CONSUMER DISPUTES

• Jurisdiction: Colorado

§ 6.3 • ARBITRATION OF CONSUMER DISPUTES

The harshest criticism of arbitration is usually reserved for consumer disputes: disputes between a consumer and the provider of a consumer product or service. See "Arbitration Everywhere, Stacking the Deck of Justice," N.Y. Times, Oct. 31, 2015. The criticism is focused on three points:

1) The contract containing the arbitration provision is a contract of adhesion. The provision is contained among extensive terms and conditions, which typically are not read by consumers.
2) The terms of the arbitration often are biased against the consumer. For example, the venue of the arbitration may be designated near the provider's headquarters and not where the service or product was sold or provided. The agreement defines an organization selected by the provider of the services or seller. It may impose costs on the buyer out of proportion to the claim. The drafter defines which disputes are required to go to arbitration and which are not.

3) The clause requires arbitration but also precludes class action arbitrations. Consumer claims are too small to be prosecuted individually in court actions, and class actions cannot be precluded by contract.

Obviously, there are counter points to these arguments, and most consumer arbitrations have provided a fair and reasonable process. The topic is simply too broad to be covered in this book. The following discussion is intended to simply point out a few of the issues.

Like labor arbitrations, special rules (or interpretations of rules) and procedures have developed for the arbitration of consumer claims against homebuilders, manufacturers, etc. These special rules are beyond the scope of this chapter.¹⁹ However, there is no Colorado case law exempting consumer disputes from general arbitration law. The leading U.S. Supreme Court decision, Green Tree Financial Corp.-Alabama v. Randolph, and the leading Colorado decision Gergel v. High View Homes, L.L.C. , should be noted.²⁰

A common issue is whether the consumer has agreed to arbitration when the bank, credit card company, etc. has mailed the arbitration agreement, on the basis the mailing was not received or was not agreed to.

In July 2009, the National Arbitration Forum reached a settlement of a suit by the Minnesota Attorney General. The National Arbitration Forum agreed to no longer administer consumer credit arbitration.²¹ The National Arbitration Forum administered arbitrations for numerous banks and credit card companies and...