Digital Protection Foundation

 

Have you ever felt wronged by a tech company? They delist a paid app you have used for years, terminate licenses you paid for years ago, or made false claims about the abilities of a product or service? You contact the company support to find out their online chatbot is of no help, emailing a representative tell you to kick dirt, and calling their support hotline nets you a $5 coupon on your next purchase. This isn’t satisfactory, so you declare

“I’ll sue them!”

But you can’t

Skimming through the mountains of legalese for the most popular tech products and services will find one common clause, forced arbitration.

Companies like Tesla, Uber, Google, Microsoft and many more force US customers to use private arbitration firms like the American Arbitration Association (AAA). When you use products for this companies you often waive your right to individual claims in the US court and waive your right to be a part of a class action.

Arbitration allows a company to skirt US courts and decide legal settlements through “neutral” private arbitrators like the AAA. These tech companies present arbitration as a net good for both parties, claiming it’s a quick and fair way of settling disputes instead of going through the bureaucracy of true litigation.

Unlike real court cases handled in the US justice system, very little information on exact cases is published, allowing disputes with companies to be settled in secrecy. It allows these companies to avoid real accountability for wrongdoing, especially when it comes to class action and group litigation. Class actions allowing many individuals to litigate against large companies, which makes litigating costs for individuals to be lower and a resolution to their dispute becoming far more accessible. Each of the companies I mentioned are very clear in not allowing class actions, with Microsoft specifically saying, “Class action lawsuits usually last for years” So instead the force consumer to individuals fight corporations through private courts.

The highest profile case of arbitration being used to violate consumer ethics was in August of 2024 where Disney claimed a husband could not sue over his wife’s death in Disney World restaurant because she had signed up for a Disney + trial streaming account which contained a forced arbitration clause. Disney had tried to push the case into arbitration with the AAA, but stood down and allowed the trial to continue after national outrage. Even after this national outrage Disney still has forced arbitration and anti-class-action clauses in its terms of service.

Companies claim that arbitration is a cheaper alternative to litigating; while sometimes that may be true it certainly always isn’t. In 2020 a Canadian Uber driver tried to sue over employee benefits but was informed he was required to pay over 15k in fees towards Uber’s chosen arbitration firm. While Canadian courts decided that this was an illegal practice, such protection doesn’t always exist and must be decided on a case-by-case basis, hurting individual litigators.

If arbitration was truly a good thing for both parties, then companies would allow litigators to choose between arbitration or a trial in a United States court; with arbitration being chosen most the time if it was truly better than a real trial. Unfortunately, this is not reality, and these companies know that arbitration unfairly benefit themselves over individual litigators.

Know your rights. Before you sign up for a product or service check the terms and conditions and skim for the word arbitration or class action. If you find that there is a forced arbitration clause then you know that product or service’s liability isn’t held up by a fair public trial but instead beholden to a private arbitration.