Why arbitration clauses exist

Arbitration clauses appear everywhere now. They are embedded in everything from streaming subscriptions to medical portals. Companies use them to steer disagreements into a private dispute process instead of a public courtroom. The idea is simple: fewer lawsuits, fewer surprises, and less risk of large collective actions from consumers.

In practice, though, these clauses don't act as a total barrier. Indeed, thousands of consumers have successfully challenged corporations through the arbitration process, and many reach favorable resolutions or settlements.

What is arbitration, really?

Arbitration is a private legal process where a neutral decision maker (often a lawyer or retired judge) reviews the facts and issues a decision on a case instead of a judge or jury. It’s typically confidential, faster, and less formal than court.

A company's arbitration clause usually aims to:

• Keep disputes out of the Court system

• Prevent group or class action filings

• Make proceedings confidential

However, an arbitration clause doesn't automatically guarantee an outcome for either side, nor does it lessen the legitimacy of a harm. Many individual disputes resolve in arbitration, and some companies settle before a decision is ever reached.

Why arbitration clauses aren't always enforceable

Courts and regulators have drawn clear lines around when arbitration clauses can be used. While every situation is different, these are some of the general principles underlying these guidelines:

1. Clauses must be fair and clearly presented

Public decisions have shown that if the Arbitration clause in a company's terms and conditions is buried, misleading, or imposes terms that are overly one-sided, courts may allow the dispute to continue elsewhere. Judges often review whether consumers had a meaningful opportunity to understand the agreement when they invalidate an arbitration clause.

2. Companies must follow their own procedures

In published cases, companies that fail to pay required fees, miss deadlines to file, or try to change terms in the middle of a dispute have sometimes been prevented from enforcing their arbitration clauses. When that happens, courts may allow consumers to pursue their claims elsewhere.

3. Large groups of similar claims change the dynamics

Mass Arbitration flips the script. Arbitration was designed for one-on-one disputes. When hundreds or thousands of consumers file similar claims, the company may face substantial administrative and filing costs. This has publicly led to global settlements, mass-resolution programs, or policy changes. Even though each claim is technically private, the financial impact for corporations isn't.

👉🏻 Read more about how Chariot Claims groups claims together for mass arbitration.

Signed an Arbitration Clause? The Window on your Claims May Still be Open.

Realizing a Company doing some harm has bated you into an Arbitration agreement can feel like a hurdle, but it is not a dead end. In many past examples:

• Arbitrators can and do rule in favor of consumers. Are Arbitrators Really Neutral? (Spoiler: They’re Not!)

• Companies may prefer settlement to avoid arbitration costs

• Certain issues can fall outside the clause entirely (for example, small-claims exemptions or violations covered by specific federal laws)

How to check if you qualify

If you believe a company has charged you hidden fees, violated your privacy, or misled you, even if you signed an arbitration clause, you can:

1. Save and review your documents. Keep screenshots, contracts, or receipts that show what you agreed to. (Read more about what counts as evidence here!)

2. Reviewing the arbitration clause language. Many arbitration agreements include loopholes—like small claims exemptions or opt-out windows.

3. Getting an informational review. Consumer-rights organizations and platforms like Chariot can determine whether your claim is part of an arbitration clause and whether arbitration is part of the process for your situation.

Think you might have a case? We’d love to hear from you at support@chariotclaims.com.

👉🏻 See if you qualify for current cases at app.chariotclaims.com.