Small Claims Help Consumers Beat the Banks
If you ever wondered why corporations prefer arbitration, the following video makes one of the reasons pretty clear. In the video, a consumer runs up various unfair overdraft charges and then avails himself of the small claims system to challenge the exorbitant fees. He pays $47.50 in filing fees and spends less than an hour between the bank and the post office. The end result: the bank, Wells Fargo, calls him and settles the case by dropping his charges.
Watch for yourself:
Compare this consumer’s experience with industry fear mongering that "without the option of arbitration, consumers would be faced with two choices—to try to navigate the legal system on their own, or to abandon their claim."
Also, contrast this consumer’s experience with alleged descriptions from employees at the National Arbitration Forum of consumers’ reactions to arbitration: “the customer does not know what to expect from Arbitration and is more willing to pay,” “[customers] ask you to explain what Arbitration is then basically hand you the money,” and that the creditor has “all the leverage [in arbitration] and the customer really has no choice but to take care of the account.” It’s no wonder that less than 1% of consumer arbitration claims are actually brought by consumers.
Now we understand why arbitration is nearly ubiquitous in consumer services: in small claims corporations pay, but in arbitration consumers pay.