Jeff Sovern
Cleveland Plain Dealer consumer affairs columnist Sheryl Harris reported on the St. John’s arbitration study in her column, Arbitration – what you don’t know about fine print can hurt you: Plain Dealing. Here is an excerpt:
Well, lawyers at St. John’s University Law School recently conducted [a study] and found that even when [consumers] know there’s an arbitration clause in a contract, they often don’t understand what it really means — even when they think they do know.
Researchers showed consumers a standard credit card contract with a binding arbitration clause and then asked them a series of questions.
The findings:
- Most people didn’t realize there was an arbitration clause in the contract.
- Of the 40-odd percent who spotted the clause, almost two-thirds believed – wrongly – that if the disputed amount was too big for small claims court, they could still go to common pleas or federal court.
- Less than 9 percent both spotted the arbitration clause and correctly said it would prevent all consumers from going to [a] court [other than a small claims court] to resolve a dispute.
Remarkably, 87 percent of the 303 people who swore they’d never agreed to a contract that contained an arbitration clause were flat-out wrong
How did researchers know? They asked people if they did business with AT&T Mobility, Sprint, Verizon, PayPal or Skype – companies whose contracts routinely require consumers to agree up front that if they ever have an issue with the company, they can only resolve it through binding arbitration.
“We don’t know about the remaining 13 percent,” says law prof Jeff Sovern, one of the authors of the study. Sovern says the number of people who had unwittingly agreed to mandatory arbitration is likely higher because researchers asked consumers about contracts with those five companies, not about every company they did business with.
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