LC-08 · Consumer
Forced arbitration clauses
The courthouse door, written shut
In ordinary words
By clicking “I agree” or taking a job, you often waive the right to sue in court and the right to join a class action. Disputes go to a private arbitrator, frequently under rules written into the contract.
Why people call it a crime
People think a company that cheats a million customers by five dollars each can be taken to court as a group. A clause in the terms can make that group case impossible. It feels like the company picked the referee.
A scene, not a hypothetical statute
Your phone bill has a mystery fee. So do ten million other bills. The terms say you may arbitrate alone. The fee is smaller than the lawyer. The company keeps the fee.
In legal terms
The Federal Arbitration Act, 9 U.S.C. § 1 et seq., makes arbitration agreements enforceable. AT&T Mobility v. Concepcion, 563 U.S. 333 (2011), held the FAA preempts many state rules against class-action waivers. Epic Systems v. Lewis, 584 U.S. 497 (2018), extended that logic to many employment class claims. The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (2022) carved out those claims.
Congress and the Court treat arbitration as a contract term favored by federal statute, not as an unconscionable surprise in every case.
9 U.S.C. §§ 1–16; AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011); 9 U.S.C. §§ 401–402.
Where it stops being legal
Fraud in the inducement, clauses barred by a specific statute, and sexual-assault or sexual-harassment disputes covered by the 2022 act are outside the usual waiver. Some states limit arbitration in insurance or other carved-out fields.