The Corporation as Courthouse

Abstract

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, and the intermediary role played by Amazon, credit card companies, and others, is crucial to diagnosing consumers’ procedural needs. Moreover, those processes interact with a larger system of external actors, including ratings websites that mete out reputational sanctions. 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