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Comment by mindslight | Hacker News Reader

That "third party" arbitrator is effectively an agent of one party.

There isn't a vibrant market for arbitrators. A consumer-oriented one clearly wouldn't be approved by the industry board, and so couldn't be chosen even if the consumer would pay for it. It's a dog and pony show to conjure a purportedly neutral third party, but that "third party's" ongoing business relies on delivering the company's desired outcome. Hence, agent.

Furthermore, the deeper repudiation of meaning is the assertion that the arbitrator's decision is exempt from review by a proper court.

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That's true neither in theory or in practice, and the win stats bear it out. Consumers are MORE likely to win in arbitration, not less, and the data do not show systemic bias of AAA or JAMS even for the largest customers.

But wait, the devil is in the details. What/where are the actual stats?

Winning isn't actually binary. A trivial example is an award of $1 to the consumer, technically a win to the consumer, but clearly a loss.

The far more meaningful statistic would be the magnitude of the awards, especially as compared to awards by courts.

I suspect mindslight's argument may well be supported by the statistics showing a reduction in costs to big firms at the hands of arbitrators, though I admit that's just speculation.

Also, you mentioned consumers. What about employees versus employers, tiny business versus large business, or other large power disparities.

Current stats sure - the arbitration industry realizes it's still on shaky ground (hence regrouping with 30 day opt out clauses etc). The incentives are still aligned the way I've described, so that's how we'd expect things to progress once its desired regime is more established.

The incentives are aligned that way if you make certain assumptions that laymen make often, but they aren't that way in real life despite the fact that arbitration is VERY established. Your narrative is built on a bad understanding of the industry (and not comparing it with a real alternative, which has lots of problems of its own).

Sure, but this doesn't change the illogic of a document that purports to be mutual terms of a contract, yet rejects its being interpreted by the age old institution that mediates disputes - the courts.

But if you want to talk about practical evidence, then why exactly do companies have to trick consumers into "agreeing" to future mandatory arbitration?! If arbitration is truly beneficial for both parties, then a consumers can always choose to enter into binding arbitration after a dispute arises!

Why can't I agree to an alternative dispute mechanism? Private arbitration is age-old as well. If I as a consumer want to choose something other than the courts (which, as a law school grad, I actually do), who are you to reduce my autonomy by telling me that I can't contract for that?

>But if you want to talk about practical evidence, then why exactly do companies have to trick consumers into "agreeing" to future mandatory arbitration?! If arbitration is truly beneficial for both parties, then a consumers can always choose to enter into binding arbitration after a dispute arises!

#1 - Contract terms are not a "trick." Making arbitration mandatory across the board is far better for the company than having it decided case-by-case, because they can estimate costs better.

#2 - Consumers don't know anything about arbitration, and much of what they think they know isn't true. Are you going to argue that consumers are weighing real cost and benefit? You're the one whose position is based on the idea that consumers aren't smart enough to avoid this terrible idea (that isn't).

The right to contract is not unlimited, especially with regards to self-contradiction. Hence not being able to sell yourself into slavery. Even these arbitration clauses recognize they'd be blatantly unenforceable if they didn't carve out exceptions for eg determining their own validity in a real court.

Re #1 - a clause that allows one to completely opt out of it, but only within 30 days after opening an account, by snail mailing (an onerous communication method compared to the customary method of the relationship) to a specific address buried in pages of terms. That's basically purpose-designed to take advantage of consumer uninformedness/laziness!

Re #2 - there's a big difference between how much effort will be spent when opening an account, versus looking into a problem.

Your general argument is casually resting on these common falsehoods that consumers proactively read tens of pages of terms, that interpreting dense legalese (including the context of relevant case law) is straightforward to the average consumer, and that companies aren't just continually attacking consumers with garbage terms [0] just because they can (most likely their legal staff justifying their own paycheck).

That's not surprising - it is after all how the status quo is perpetuated, and how attorneys gatekeep access to the legal system (thus undermining equal protection). It's just not right, in the sense of morality or even correctness.

[0] http://www.law.harvard.edu/programs/olin_center/fellows_pape...

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Nevermind thinking ahead!

Except it's not new, and the stats show it's not what you think it is. You're not thinking ahead -- you're making assumptions based on a lack of knowledge of a complex field you know little about, and consequently reality doesn't look like your assumptions.

> you're making assumptions based on a lack of knowledge of a complex field you know little about

Well, to even form a contract, both parties have to have an understanding of what exactly is being agreed to. So it's more than a bit disingenuous to claim that the real details are just too complex for a non-insider to have an opinion.

And BTW, the trend is new enough that individual companies are still shifting between having said clauses and not after getting slapped down (eg CapitalOne), and tinkering with said clauses in an attempt to make them hold up better (eg adding a 30 day opt out period from account opening).

> both parties have to have an understanding of what exactly is being agreed to

An understanding that they will be undergoing arbitration is enough to satisfy the "meeting of the minds" element, the fact that a lot of people have antifactual opinions about arbitration notwithstanding.

>And BTW, the trend is new enough that individual companies are still shifting between having said clauses and not after getting slapped down (eg CapitalOne), and tinkering with said clauses in an attempt to make them hold up better (eg adding a 30 day opt out period from account opening).

Yes, and this is primarily because of silly attacks on arbitration, and not because of actual facts. Judges are really bad at looking at facts -- this is one more area where arbitration tends to do far better. The average person loves rent control, too, but that doesn't stop them from being provably wrong.

One of the ways forced arbitration benefits companies is that the individual being subjected to it knows their complaint will be decided by a kangaroo court.

They also know that any award they might receive will be smaller, and that if they do not win the case, the process will be costly and without appeal.

If the win rates remain unchanged after filtering out most of the consumer/employee complainants who don't have a slam dunk case, that is likely because there is systemic bias.

But awards aren't smaller, it's LESS costly, and it's faster.

People make the mistake of assuming that the advantage for companies has to be in the trial results, when the fact is that there's plenty of advantage of paying claimants at a higher rate as long as you're getting it done faster with fewer billable hours to your attorneys.

I was an arbitrator before I was a lawyer. I was not an agent of either party, and the consumer won more frequently than did the business.

Based on professional observation, consumers/customers (meaning individuals) generally win arbitration cases against businesses. Employees tend to lose. Haven't seen enough B2B arbitration cases to comment on any sort of pattern.

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