The Effectiveness of Arbitration for the Resolution of Consumer Disputes


American consumers have become increasingly aware of the inability ofthe existing legal system to effectively resolve their disputes. The problem has been twofold. Substantively, the law has failed to adapt itself to the rapid changes of the marketplace. Procedurally, the legal system has relied on traditional methods of resolution that no longer reflect the needs of consumers.

The response to growing pressure from consumers and their advocate organizations has been to effect some changes in the substantive law. Recently, statutes have been enacted on both the federal and local levels which afford the consumer greater protection in such areas as warranties and installment credit. The courts have employed constitutional and common law theories to protect consumers against unconscionable and unfair transactions. Yet, despite these recent substantive gains, consumers have been unable to satisfactorily resolve their disputes due to existing procedural obstacles.

The traditional methods of dispute resolution–civil or criminal litigation in a court of law–are inappropriate for the resolution of the typical consumer claim. Nor have non-traditional forums eased the plight of consumers. The need for an effective procedural mechanism has stimulated a search for possible alternatives. Consumer arbitration has been frequently proposed because it combines the best elements of both the traditional and non-traditional methods of resolution. This Note will critically evaluate the consumer arbitration programs that have been established. It appears that while arbitration is generally desirable, it must be tailored to the special needs of the consumer.

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