The U.S. Supreme Court has decided to put limits on class-action lawsuits. The court ruled in a 5-4 vote to allow companies to force consumers to use arbitration if it’s written into the contract.
When you buy a cell phone, open a checking account, or take out a car loan, make sure to read the fine print. There could be a provision in the contract that bars consumers from filing a future-class action lawsuit. Instead, it provides for resolving any dispute through individual arbitration.
Consumer advocates are criticizing the decision, saying it favors corporations.
But the Philadelphia attorney who pioneered the practice says it’s a win for both parties. Alan Kaplinsky, who represents banks and consumer finance companies, said most consumers never derive any benefit from being part of a class-action lawsuit.
“You’re lucky if you get a worthless coupon. People just don’t get anything out of it,” he said.
Kaplinsky said settling cases through the arbitration process saves companies millions of dollars in litigation fees. And individual consumers are more likely to get more money from the settlement, he said.