Arbitration clauses can significantly impact consumer rights by limiting access to collective legal action through class arbitrations or class-action lawsuits. They often require disputes to be resolved individually in private arbitration, which can deter consumers from pursuing claims, especially if potential recovery amounts are small and not worth the individual legal expense.
For example: A group of consumers who have all experienced minor damages from a defective product may find it economically unfeasible to pursue individual claims due to higher costs than the potential recovery. An arbitration clause preventing class actions could effectively shield a company from liability for widespread but individually small harms.