Mass Arbitration: The Risk Lurking in Consumer Agreements

Arbitration agreements have long offered companies and consumers an efficient alternative to litigation — streamlined procedures, lower costs, and faster resolution. In consumer markets, requiring individual arbitration and waiving class actions became standard for managing risk.

Then technology changed the equation. As attorney advertising and solicitation on social media proliferated, mass coordination became effortless. Plaintiffs’ firms began filing thousands of nearly identical consumer claims at once, turning a process built for efficiency into one straining under its own rules. The phenomenon, known as mass arbitration, can be more punishing than the class actions it replaced if companies are unprepared and haven’t built protections into their arbitration terms. Without safeguards against coordinated filings, companies face millions in administrative fees before reaching the merits of a case, creating pressure to settle weak, untested, or often frivolous claims.

Arbitration providers are adjusting their rules and companies are revising their contracts, but the way forward remains in flux. Mass arbitration has already taken hold in consumer electronics, financial services, employment, and gig economy platforms, and it’s surfacing in healthcare and telecommunications. Its reach could extend into any market in which arbitration agreements meet digital scale.

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