Individual Arbitration vs. Class Action

Posted by Ashley O’Connell.

An article from the New York Times named, “Arbitration Everywhere, Stacking the Deck of Justice,” caught my attention in regards to the companies American Express and Citibank. Recently, American Express and Citibank have emphasized their beliefs of how customers can no longer use class action, but in fact use individual arbitration instead. Located in the fine print of American Express’ contract it states, “You or we may elect to resolve any claim by individual arbitration. Claims are decided by a neutral arbitrator.” By doing so, it is causing uproar between consumers and the company for numerous reasons: it is cheaper to use the approach of class action, the customers are more comfortable utilizing class action, and arbitration clause have far worse consequences.

By forcing customers to use arbitration, the freedom of the people is not being recognized and their right to make their own decisions and go to court is no longer available. American Express is not the only company doing this to customers; Citibank is another targeted company. It was noted that two-thirds of customers from Citibank had dealt with credit card fraud and did not receive any monetary awards throughout the arbitration process. The arbitration clause consequences, “can be seen far beyond the financial sector,” and are also made even between private schools and funeral homes.

There are a few cases, on the other hand, that the Supreme Court allowed class action to take place in regards to fraud. It states in the article that the customers who were allowed to use class action were one’s who, “the lawyers represented clients that had paid billions of dollars to resolve class actions over the years.” These are lawyers who are making millions of dollars, and that is the reason why the class action is allowed to take place.

I disagree and believe that customers should have the right to fight on what they believe. Whether is through class action or arbitration, consumers should be allowed to do that they are comfortable with. The statistics in the article show that there is a significant difference between people who take action through arbitration versus class action. Class action allows consumers to work in groups and defend themselves against a company.  This is more favorable and certain companies did not want that to happen. I would advise consumers to read the contracts of the companies in which they are involved; they are signing away their rights every time a contract is signed that is not read thoroughly, and the use of individual arbitration is a pattern that is spreading throughout companies.

Ashely is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2017.