Cell phone service providers use forced arbitration to prevent virtually all of their subscribers from pursuing legal claims against them in court. A 2015 report by the Consumer Financial Protection Bureau (CFPB) found that 99.9% of wireless subscribers were subject to forced arbitration agreements.
These agreements also routinely force subscribers to waive their right to band together in class actions. This practice was widely embraced by industry following the U.S. Supreme Court’s 2010 decision in AT&T Mobility LLC v. Concepcion, in which the Court held that the Federal Arbitration Act (FAA) displaces any state law that “interferes with fundamental attributes of arbitration,” including its individualized one-on-one proceedings.
Prohibiting class actions has the effect of making it not worthwhile or extremely difficult for injured consumers to bring small-dollar claims, especially since claimants in these cases are unlikely to be able to obtain legal counsel with such limited recovery on the line. As Justice Breyer noted in his dissent in Concepcion, “What rational lawyer would have signed on to represent [claimants] in litigation for the possibility of fees stemming from a $30.22 claim?” By negating such claims before they are even brought, class-action waivers effectively insulate carriers from liability for their systemic and flagrant violations of consumer protection laws.