New Data Analysis Shows Americans More Likely to be Struck by Lightening Than Win in Forced ArbitrationSeptember 10,2019
Washington, DC – Today, the American Association for Justice (AAJ) released a comprehensive report on forced arbitration, which examines forced arbitration claims data over a five-year period from two of the largest arbitration providers in the U.S., AAA (American Arbitration Association) and JAMS. The Truth About Forced Arbitration clearly demonstrates forced arbitration strips Americans of fundamental rights and provides corporations with virtual immunity.
“This groundbreaking research proves the American public has been sold a pack of lies about forced arbitration – it isn’t just as fair as a jury trial, and isn’t faster or cheaper. In fact, the brand-new data – provided by the arbitration providers themselves – revealed today show you are more likely to be hit by lightning than win in forced arbitration,” said AAJ President Bruce Stern. “The truth is that if you download an app, purchase a cell phone, start a new job, use a rideshare, or admit a parent into a nursing home, you are forced to sign away your right to hold law breaking corporations accountable.”
Even though there are over 800 million arbitration clauses in effect today, AAA and JAMS only recorded 30,000 consumer arbitrations over a five-year period – an average of 6,000 claims annually. Of those 6,000 consumer arbitrations, only 6% of cases, or 1,909 consumers, won some type of monetary award, which averages to 382 consumers per year, and is less than the number of people stuck by lightning annually. In addition, AAJ researchers discovered AAA deletes cases by filing date rather than closure date every quarter even though this is a database of closed claims. This means that the longer it takes for an arbitration case to resolve, the quicker it is purged from that database and any case that takes more than five years will never even appear in their records. Any research claiming arbitration is faster than litigation has been skewed by this data manipulation.
The report highlights the two largest sectors guilty of using forced arbitration clauses – employment contracts and financial services. Of the 60 million employees subject to forced arbitration, only .02% tried to pursue a claim, and of those, only 282 were awarded monetary damages over the five-year period studied. That equates to an average of 56 workers per year, less than one-ten-thousandth of one percent of all American workers subject to forced arbitration. In financial services arbitration (credit cards/banks), consumers brought 6,012 claims over five years totaling $3.7 billion in damages, but won monetary awards in just 131 (2.2%) cases, totaling $7.4 million, which is .2% of the claimed damages. According to studies conducted by the Economic Policy Institute (EPI), more than 80% of nonunion private sector workers will be unable to sue their employers due to forced arbitration within the next five years. In addition, the most marginalized individuals are the ones most adversely affected – women, minorities, and lower income individuals, as forced arbitration is more common in low-wage workplaces and in industries that are disproportionately composed of women and African American workers.
Stern added, “Forced arbitration silences sexual harassment survivors, takes advantage of workers and consumers, and undermines public health and safety. Fortunately, there is a solution to this pernicious problem. Congress has the opportunity to end forced arbitration and vote for the FAIR Act this month, so that all Americans can exercise their fundamental rights.”
Click here to download the full report, or visit www.justice.org/ForcedArbReport