The Corporation as Courthouse
58 Pages Posted: 20 Nov 2016 Last revised: 16 Jan 2020
Date Written: November 18, 2016
Despite the considerable attention paid to mandatory arbitration, few consumer disputes ever reach arbitration. By contrast, institutions such as Apple’s customer service department handle hundreds of millions of disputes annually. This Article argues that understanding businesses’ internal dispute processes is crucial to diagnosing consumers’ procedural needs. Moreover, businesses’ internal processes interact with a larger system of private actors. These actors include ratings websites that mete out reputational sanctions. The system also includes other corporations linked to the transaction, such as when American Express adjudicates a contested sale between a shopper and Home Depot. This vast private order offers promise to advance societal dispute resolution goals by providing large-scale redress and preserving relationships in ways that more formal institutions cannot. At the same time, businesses closely guard their internal processes as trade secrets. Out of public view, they are pushing the bounds of dispute resolution by, for example, considering factors such as a customer’s social network in deciding how to handle a complaint. If public intervention is needed, courts are at best only part of the solution. Instead, the frontier of consumer dispute resolution lies beyond arbitration and class actions in agency supervision of collaborative negotiations between consumers and corporations.
Keywords: digital platforms, Amazon, algorithms, behavioral economics, market power, CFPB, FTC, consumer protection, competition policy, contracts, antitrust, dispute systems design, technology, inequality, civil procedure, settlement, internet
JEL Classification: K10, K12, K20, K2, K20, K23, K21, K4, K40, K41, L13, L14, L1, L10, L21, L22, L24, L41, L43, L51, L53
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