June 08, 2020 Feature

Arbitration Agreements and Limits on Class Actions

Liz Coyle

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Arbitration agreements insulate corporations from liability and restrict consumers’ rights.

Arbitration agreements insulate corporations from liability and restrict consumers’ rights.

syahrir maulana via iStock / Getty Images Plus

Americans routinely enter into contracts for everything from cell phone service to apartment leases, even employment, but many sign contracts without fully understanding that their signature potentially forfeits their fundamental rights—such as the right to join together in a class action lawsuit. The U.S. Supreme Court, in a spate of rulings in recent years, has broadened the power of the Federal Arbitration Act, allowing corporations to insulate themselves from liability by forcing consumers to preemptively give up these rights.

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