After a year-long study, the Consumer Financial Protection Bureau (CFPB) issued a preliminary report describing arbitration clauses buried in consumer contracts as "take-it-or leave it" propositions that actually leave the vast majority of consumers with no recovery for corporate wrongdoing.

The CFPB report describes an ever expanding system of private arbitration where consumers, through fine print contracts, or click and agree and terms of service have “voluntarily” relinquished their 7th Amendment right to trial by jury. In its place, companies have substituted secret arbitration proceedings in which they select the arbitrator, the location of the arbitration, and the fees to be paid. Additionally, proceedings virtually eliminate discovery necessary to prove the case, prohibit the pursuit of claims collectively or as a class action, place limits on the time in which a claim can be filed, and even impose limits on liability. 

Not surprisingly, despite the rapid deployment of arbitration clauses across the financial services industry covering millions of individual consumers, the CFPB was only able to document the filing of 900 arbitration claims. This stands in stark contrast to 13 million class members who made claims and received $350 million payments in only eight class cases over the same period.

While the CFPB’s report is only preliminary, its initial findings appear to confirm that arbitration fails to provide consumers with any meaningful relief for corporate wrongdoing. Rather it provides predatory businesses with immunity for bad behavior while stripping consumers of their basic constitutional rights.