New ILR Blog: “The Mass Arbitration Racket: Unscrupulous Abuse Of The Arbitration Ecosystem”

A recent ILR blog post examines the world of class actions, where consumers receive pennies on the dollar, if anything at all, and the lawyers get big paydays.  A 2015 study by the Consumer Financial Protection Bureau found that only 13 percent of class actions resulted in a payout for consumers. And even then, the average award for consumers is about $32, while plaintiffs’ attorneys got about $1 million.

Recent ILR research shows that consumers win more money, more often and more quickly in arbitration than in litigation. A system where lawyers reap the rewards is why many consumers might choose to use arbitration to settle disputes with companies. But just like how plaintiffs’ lawyers found ways to abuse the class action system, some are finding ways to use arbitration to prioritize their interests over their clients by encouraging what’s known as mass arbitration. Heralded as a way to increase access to justice, in reality the goal of mass arbitration is to increase litigation costs.