An Arbitration Clause Health Check

Arbitration clauses with class action waivers remain one of the most effective tools that consumer-facing companies can employ to fend off consumer class action litigation. Yet many companies stumble both in getting their customers to agree to the arbitration clause and in drafting a clause that captures all claims that they might face. As we continue to work, shop, and engage with the world from home, companies should perform a quick "health-check" of their arbitration clause, asking themselves at least the following questions:

(1) If you contract with your customers through formally executed documents, do you ensure that your customers execute those documents? Do you maintain records sufficient to prove that your customers signed the contracts? If you use e-signatures, is the process compliant with the federal E-Sign Act and any state equivalents such as California's Uniform Electronic Transactions Act (UETA), Civil Code section 1633.1 et seq.?