Opting Out: Acting to Protect Your Right To Go To Court

When we enroll in a subscription or buy something online, most of us scroll through the fine print and check the box "agree to terms and conditions" without reading them. However, when we check the box, we are entering into a legal contract. And that means that we have agreed to all of the terms. Most written consumer and employment contracts include a binding arbitration clause. This clause means that the parties gives up their right to a jury trial to resolve a legal dispute, in favor of permitting a contracted third party to make the decision.  The process will not include the procedures we normally associate with court processes such as a right to testify or to offer proof through evidence.  Typically the clauses permit the business or employer to select the third party or arbitrator.  Most clauses require binding arbitration, meaning that the decision cannot be appealed.

Consumers usually have a right to a jury trial. Under the law, the Seventh Amendment to the U.S. Constitution guarantees the right to have federal cases adjudicated by a jury. In Virginia, most civil cases involving a dispute over $20.00 can be tried by a jury. Unfortunately, many of us give up that right without even understanding that we've done so. Consequently, when we dispute a charge, late fee, or interest payment, we must accept the arbitrator's final decision after agreeing to “binding arbitration.”

Arbitration and mediation are not the same things! 

Both mediation and arbitration can be used instead of a court to resolve a legal dispute. However, they are not the same thing. Mediation is often cited as creating a superior alternative to litigation. In mediation, the parties make the decision, and a mutually acceptable mediator provides a structure for the parties to create and evaluate options to help reach an agreement. The parties, the people with the knowledge and the consequences of the dispute, make the decision rather than a third party.  If they do not reach an agreement, they may still go to court.

However, in binding arbitration, a third party, usually selected unilaterally, decides the outcome. With a binding arbitration clause, participation in arbitration is not voluntary like mediation, but required.  When a disputant is not satisfied with the arbitrator's decision, they cannot appeal or challenge it. Some consumers have challenged the provision of contracts that requires arbitration; however, it is difficult to win that challenge. Virginia law creates a presumption that the binding arbitration clause in the contract is valid. In order to maintain their right to go to court, the consumer would need to demonstrate a basis under contract law for the clause to be invalid.

Opting out: One exception to binding arbitration is when the consumer opts out. For example, recently Venmo, the app that permits consumers to conveniently transfer funds changed the terms of their agreement.  They added a binding arbitration clause. Venmo emailed to most subscribers informing them of the addition and providing the opportunity to "opt-out ."Opting out means that the consumer maintains their right to go to court in the event of a dispute, including a class action.  Details on how to opt out are found online in the new users' agreement. https://venmo.com/legal/us-user-agreement/ Basically, to opt-out, the consumer must download and print the opt-out form located at https://help.venmo.com/hc/en-us/articles/360062640153. The form must be mailed by USPS to the address on the form. Current Venmo users must opt-out by June 22, 2022.

Choices:  What can the consumer do to preserve the ability to participate fully in the decision in the event of a dispute? All consumers should understand what “binding arbitration” means.  When signing any contract that includes language requiring binding arbitration, the consumer should investigate the potential for opting out. When the business contract does not include that option, the consumer should consider whether or not the advantages of entering into the agreement outweigh potential losses if any dispute arises. 

More information. For more information about mediation and arbitration, or consumer rights, contact our office and schedule a free on-line meeting.