Interesting. I guess then in that case the question would be why do the firms have such conditions to begin with? Isn't it better for all the companies to just make people pay the costs too?
A cursory read suggests that having arbitration fees paid by the customer opens the door for them to ask the courts to throw out the arbitration clause; so it's safer to assume responsibility for the costs to ensure the clause remains enforceable.
Whoever pays the cost becomes the customer, with all the incentives that entails. The point of arbitration is keeping the decision makers incentivized towards the companies in a way that judges and juries would never be.
Why works it matter who's actually making the payment? I would've thought what matters is who is bringing them business & causing them to earn money, not who is actually paying them? It's not like customers can take their businesses to another arbitrator.
Sorry I still don't get it. Couldn't the same thing happen even if consumers were paying? It's still the business that's bringing them the fees (even if consumers are paying them), so it seems like they would still be incentivized to side with the businesses rather than with the consumers. The consumers have no choice here, so I don't see what incentive they have to rule in favor of consumers even if they're the ones making the payments.
For the choices that matter to the arbitration firm, they absolutely do. Without a customer who is willing to initiate arbitration proceedings, there are no fees to be collected.
If there is a huge upfront financial burden to the customers, the customers are much more likely to just drop the whole matter. And while the businesses would absolutely consider consumers not pursuing grievances to be a win, the arbitration firm does have an incentive to actually have there be some arbitration.
As far as I can tell, the actual point of arbitration is more to dodge the extensive discovery and subpoena powers of actual courts. If you're suing Amazon in small claims court, if you can convince the judge that Jeff Bezos' testimony meets the legal bar, you can compel him to testify in court. Or you can compel Amazon to turn over broad swathes of potentially damaging information. You can even force third parties to come in and testify, if it should be relevant.
In arbitration, you do not have a judge, so there isn't subpoena power, and discovery is extremely curtailed.
That would make sense if it's the case, but in that case, is it really worth it for Amazon to give up that protection for the tens of millions of dollars at stake here? I would've thought they'd still prefer to pay that.
The way to dispute it would be to look at actual statistics to figure out if the arbitrators appear to be more biased than regular courts. I think some studies have actually done that and found that there is no inherent bias towards the corporate defendant in arbitration, but I don't have a ready cite in front of me.
On the contrary, every study I know of shows substantial bias towards the corporate side in these sorts of disputes. That's why they're attractive to the corporation in the first place. This link explains how even a "fair" system (arbitrator chosen from a random list) is gamed:
It's simple. The optimum situation from Amazon's point of view is a system that gives almost enough justice to avoid public outcry, and no more. The most outrageous cases should get paid a modest amount, average cases should get paid a tiny amount, and no stretch cases should get paid. Amazon anticipated that by paying for the arbitration process, they'd end up with a set of pro-Amazon arbitrators and that, in itself, would keep the number of cases filed to a minimum. What they didn't anticipate was enough people angry enough to file cases even in a biased system just to mess with the company.
