Arbitration does not mean you get to resolve a dispute, it is not "small claims court, lite-version". Arbitration means that whoever has the most money will win.
I disagree strongly. I have gone to arbitration close to a dozen times against big companies. And I've won in every case but one. MOst of the time they settle before the process gets going.
What arbitration does is remove the prospect of a big punitive award against the company. But in all my cases, I got exactly what I wanted to the extent that I had actual documentated losses or damages. Would it have been nice to win a punitive award for a million bucks here or there? Certainly.
I found in all cases, that the arbitration method produced pressure on the company to assign a real person with authority to settle issues (usually a paralegal or in house counsel), and produced incentive for them to settle before owning fees to the arbitration company. In virtually all cases, the arbitration clause specified that the company would pay the initial filing fee, which usually runs like $700-$1000. That basically means that if your claim is for less than $1000, they'll just give it to you without much fuss.
The basic method to follow is:
1. Read your agreement. It will say how to file. Usually it's with the American Arb Association, which is the favorite. Or a competitor, but it's almost always the AAA.
2. You almost always have the right to have the hearing near you or a place of your choosing. Or often your place of last billing. In one case, I used this to my benefit by changing my billing address to a mailer forwarded in remote Alaska.
3. Almost every agreement, because of the patchwork of state laws and Federal Law like the FAA, have the company pay the initial filing fee. This is usually around $1,000. For example, here is Sprint:
(4) We each are responsible for our respective costs, including our respective counsel, experts, and witnesses. Sprint will pay for any filing or case management fees associated with the arbitration and the professional fees for the arbitrator's services.
4. Almost every agreement has constraints on the company as well, which means that they have to negogiate first. So:
Before initiating an arbitration or a small claims matter, you and Sprint each agree to first provide to the other a written notice ("Notice of Dispute"), which shall contain: (a) a written description of the problem and relevant documents and supporting information; and (b) a statement of the specific relief sought. A Notice of Dispute to Sprint should be sent to: General Counsel; Arbitration Office; 12502 Sunrise Valley Drive, Mailstop VARESA0202-2C682; Reston, Virginia 20191. Sprint will provide a Notice of Dispute to you in accordance with the "Providing Notice To Each Other Under The Agreement" section of this Agreement. Sprint will assign a representative to work with you and try to resolve your Dispute to your satisfaction. You and Sprint agree to make attempts to resolve the Dispute prior to commencing an arbitration or small claims action. If an agreement cannot be reached within forty-five (45) days of receipt of the Notice of Dispute, you or Sprint may commence an arbitration proceeding or small claims action.
This basically means they get a chance to make it right before you can cost them $1,000. This is an awesome incentive for them to settle, every time. If what you want costs less than the filing fee, and you seem determined to fight them, they will just cave. It's simply mathematics.
5. Without arbitration, in most cases, companies have a huge advantage. You can't sue them in small claims court or state court because of jurisdiction. The first thing the company will do is petition for removal for diversity of jurisdiction - that means moving it from small claims or state court to Federal court. They'll win, you'll have to deal with a different court, with a lot of procedures and burden on you. 99% of the time this means that you aren't even ever going to get to a hearing, let alone a trial. They'll file a motion to dismiss, and in most cases, you won't be able to even formulate an appropriate response to the Court. All that procedural bias goes away in arbitration.
So those are the good sides. The bad sides are, they can process a few cranks like me sending arbitration demands, day in and day out, and it becomes just another cost of doing business. It never gets anything changed. Class action awards are enough money that it forces the companies to pay attention.
I think if we have a strong regulatory framework, where the regulators are going after the big problems, and individuals use arbitration, things will be better than the class action system.
I'll put to you this way, if you ever are dealing with customer service, and have decided, well, I am just going to have to sue them, you know it's over. If you tell them that, they'll say go ahead, and they are out. If you instead document your problem, send a dispute notice with intent to arbitrate, they have 45 days to deal with you (in most cases), or else they are $1,000 minimum. You will get a call, it will be someone who can settle and solve problems, and that's that.