Companies and consumers face digital divide on arbitration policies

| Apr 22, 2014 | Business Litigation

One of our themes in this blog is that there are other ways besides the courtroom to resolve business disputes.

As we noted in our April 4 post, arbitration is often an effective way to address issues that arise in the business world.

In today’s post, we will discuss a particular aspect of this alternative dispute resolution approach. Our topic will be the way a consumer’s interaction with a company through social media tools may restrict that consumer’s ability to pursue litigation against a company.

The New York Times addressed this question last week. The Times began its piece with a specific example that prompts a question. Could downloading a coupon for a few cents off of a box of cereal mean that the consumer is later required to use binding arbitration rather than litigation if a dispute arises?

Of course, downloading a coupon is only one of many online actions a consumer could take. From clicking like on a company’s Facebook page to following it on Twitter, there are now many ways to interact with companies in the digital sphere.

A decision by the U.S. Supreme Court in a 2011 case seemed to open the way for increased use of arbitration involving individual consumers. The case was called AT&T Mobility v. Concepcion.

In the Concepcion case, the Court held that companies could craft standard-form contracts to require individual consumers to address concerns one-by-one through arbitration – rather than through a class-action lawsuit.

Our point in this post is neither to praise consumers who may be too eager to sue nor to defend companies that try to tie consumers’ hands. We merely seek to show that the logic of encouraging alternative dispute resolution is now being extended into the online arena.

Source: The New York Times, “When ‘Liking’ a Brand Online Voids the Right to Sue,” Stephanie Strom, April 16, 2014