Should Your Website Terms and Conditions Include an Arbitration Clause? A Practitioner’s Guide to a Complicated Question

One of the most common questions that arises when drafting or updating website terms and conditions for clients is deceptively simple: Should we include an arbitration clause?

There is no universal right answer, and if any attorney tells you otherwise, be skeptical. The calculus depends on the nature of your business, your user base, the types of disputes you are realistically likely to face, the jurisdictions in which you operate, your risk tolerance for costs, and, increasingly, your exposure to what has become one of the most disruptive forces in commercial disputes: mass arbitration. And now, with AI entering the picture as a tool for claimant recruitment and claim generation, that exposure is expanding faster than most companies’ legal teams can keep up with.

This article walks through the key considerations. It is not a substitute for legal advice tailored to your specific business and its agreements, but it is meant to give you a practitioner’s map of a landscape that has changed dramatically in recent years and shows no signs of settling down.

Arbitration 101: What You Are Actually Deciding

Before getting into the strategic calculus, let’s be precise about what arbitration actually is and what it is not. Arbitration is not mediation. Mediation is a facilitated negotiation: informal, nonbinding, and with nearly anything said at the table inadmissible in a later proceeding. You can walk away from mediation at any time. An arbitration, by contrast, is an actual adjudication. It looks and functions like a bench trial, typically held in a conference room rather than a courtroom, presided over by a privately selected arbitrator or panel. It results in a binding “award.” Once that award is issued, your options to challenge it are extraordinarily limited and notably far more limited than appealing a court judgment.

Under the Federal Arbitration Act (FAA), a court may vacate an arbitral award only on grounds of fraud, corruption, evident partiality, arbitrator misconduct, or the arbitrator exceeding their authority. The FAA does not provide for vacatur because the arbitrator misread the contract, misapplied the law, or reached a factually erroneous result. Some courts also recognize the judicially-created doctrine of “manifest disregard of the law.” Critically, even that narrow doctrine requires more than an arbitrator getting the law wrong. The arbitrator must have acknowledged the correct legal rule and consciously decided to disregard it. An arbitrator who simply misreads the statute does not meet that threshold.

This “one and done” quality is a feature of arbitration for parties that want finality, and a serious risk for parties that lose.

The Gateway Question: Is Your Arbitration Clause Enforceable At All?

None of the strategic considerations below means anything if your arbitration clause is not enforceable. And for online agreements, enforceability turns primarily on how users are presented with, and asked to accept, your terms. Courts have developed a relatively consistent spectrum:

Browsewrap — Not Enforceable. A browsewrap agreement purports to bind a user to terms simply by virtue of the user visiting or using the site, typically with language like “by using this site, you agree to our terms.” Courts have consistently rejected these as failing to provide adequate notice and to manifest meaningful assent.

Sign-in Wrap — Potentially Enforceable. Sign-in wrap (or “sign-up wrap”) agreements place language near a purchase or account-creation button, such as: “By clicking [Place Order], you agree to our Terms and Conditions.” No separate acknowledgment of the terms is required. Courts in the Second and Ninth Circuits, the two circuits with the most e-commerce caselaw, will enforce these if (1) the website provides reasonably conspicuous notice of the terms to which the user will be bound, typically through a clearly visible hyperlink; and if (2) the user affirmatively completes an action that manifests assent. What constitutes “reasonably conspicuous” is heavily fact-specific and has generated substantial litigation. Font size, color contrast, proximity to the action button, and whether the hyperlink is visually distinguishable all matter.

Clickwrap — Likely Enforceable. A clickwrap agreement requires the user to actively click an “I Agree” button after being presented with, or given a link to, the terms. Courts generally enforce these. The user must take a deliberate affirmative act acknowledging the terms.

Scrollwrap — Generally Enforceable. The gold standard: the user must scroll through the actual text of the terms before being permitted to click “I Agree.” Courts uniformly enforce scrollwrap agreements.

The practical implication: if you are going to include an arbitration clause (and a class action waiver) in your terms, the presentation format of those terms has significant consequences for whether any of it will hold up when challenged. If you are using a browsewrap design, your arbitration clause may be effectively decorative.

The B2B vs. Consumer Distinction: They Are Not the Same Analysis

Before going further, it is worth being direct: the analysis for a business-to-business contract is materially different from the analysis for a consumer-facing terms of service.

In the B2B context, arbitration has historically been and generally remains a sensible default for some companies. It is faster and more confidential, and it allows you to select arbitrators with subject-matter expertise. Critically, in commercial disputes, the cost structure is usually more symmetrical as both sides pay their own lawyers, and arbitration fees are often a shared burden. The “bet the farm” concerns that animate much of the consumer arbitration debate are largely absent when sophisticated counterparties are disputing a contract.

A useful real-world illustration: Amazon’s approach to dispute resolution differs dramatically depending on who the other party is. In Amazon’s contracts governing its third-party marketplace sellers, a classic commercial relationship, arbitration is the dispute resolution mechanism, reflecting Amazon’s view that seller disputes benefit from the confidentiality, expertise, and efficiency of arbitration. Amazon’s seller arbitration clause is explicitly designed to foreclose collective action by sellers. For consumer-facing disputes, Amazon has, like a number of other large consumer platforms, moved toward litigation for consumers, a strategic choice that reflects the evolving mass arbitration landscape described below.

The takeaway: if your website primarily serves businesses or professional users, the arbitration calculus looks quite different from that of a consumer e-commerce platform, a subscription app, or any service marketed directly to the general public.

The Pros of Arbitration (When They Still Hold)

Speed and Efficiency

Litigation in federal court can take years to reach trial. Arbitration, properly structured, can resolve a dispute in a matter of months. You can define procedural timelines contractually, such as specifying that arbitration must conclude within 60 or 90 days of filing, or capping document discovery. This flexibility is a genuine advantage.

Confidentiality

Unlike court proceedings, which are public record, arbitrations are presumptively confidential. The evidentiary record, the award, and the proceedings themselves generally remain inaccessible to the public (FINRA arbitrations are public), at least until a party seeks to confirm or vacate the award in court. If your disputes are likely to involve trade secrets, sensitive business strategy, employment matters, or anything you would prefer kept out of a press release, confidentiality is a meaningful benefit.

Expert Decision-Makers

Arbitration allows parties to select their arbitrators, at least in part. Rather than having a jury or generalist judge assigned randomly to a complex dispute involving, say, ad tech, digital contracts, data licensing, or SaaS performance failures, you can require that the arbitrator have specific industry expertise or a background in a particular area of law. This can substantially improve the quality of the fact-finding process and reduce the time and expense of educating the fact-finder.

Finality

Arbitration awards can be enforced in federal court under the FAA, and internationally through the New York Convention (for international disputes). You get a result you can act on. The flip side is limited appellate rights, which we discuss below as a potential con, but for claimants in the winning column, finality has real value.

Class Action Waivers and FAA Preemption

Historically, one of the most strategically important features of an arbitration clause for consumer-facing businesses has been its ability to foreclose class actions. Some states, most significantly California, allowed courts to invalidate class action waivers in consumer contracts as unconscionable, effectively requiring defendants to face class litigation even if they had contractually precluded it.

The Supreme Court ended that in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), holding that the FAA preempts state-law rules that condition the enforceability of arbitration agreements on the availability of class procedures. The Court reaffirmed the principle in American Express Co. v. Italian Colors Restaurant, 570 U.S. 228 (2013), and Epic Systems Corp. v. Lewis, 584 U.S. 497 (2018). The result: if you have a valid arbitration clause, and if that clause contains a class action waiver, the FAA will generally preempt state law that would otherwise invalidate the waiver, provided the agreement is enforceable.

This has made arbitration clauses extremely attractive to consumer businesses that face class action risk. A single plaintiff’s arbitration claim capped at, say, a few hundred or a few thousand dollars is an entirely different category of risk than a class action representing millions of consumers.

But, and this is an enormous but, the strategic landscape has shifted significantly in the years since Concepcion.

The Cons of Arbitration: The Picture Has Changed

Limited Appellate Review

As noted above, the “one and done” quality of arbitration is simultaneously a feature and a bug. If the arbitrator gets it wrong, as a matter of fact, contract interpretation, or law, you generally have no recourse. The bar for vacatur is extraordinarily high. Consider what courts have said:

• An arbitrator who misreads a key contractual provision and awards damages on a theory unsupported by the contract’s plain language? Almost certainly not grounds for vacatur.
• An arbitrator who applies the wrong legal standard? Not enough under manifest disregard, which requires the arbitrator to have acknowledged the correct rule and consciously decided to ignore it.
• An arbitrator who awards consequential or lost-profit damages that the contract expressly excluded? This could support vacatur on grounds that the arbitrator exceeded her authority under the contract, but only if the exclusion is explicit.

For businesses confident in the strength of their legal positions, this limited review creates significant downside risk. You may “win” the contract dispute and still lose in arbitration with no meaningful path to correction.

It is worth noting that both JAMS and AAA now offer optional appellate processes that can be incorporated by contract. These provide a meaningful (if still limited) review mechanism for parties that want some protection against egregious errors, though they add time and cost.

Limited Motion Practice

In court, a defendant has the right to move to dismiss a complaint on grounds such as failure to state a claim, the statute of limitations, lack of standing, or other defects before engaging in discovery. A defendant also has a right to move for summary judgment after discovery if the evidence fails to generate a genuine triable issue. Arbitration has neither of these mechanisms as of right. Motions to dismiss and summary disposition are available in arbitration only at the arbitrator’s discretion, upon a party’s request for leave. Many arbitrators are reluctant to grant them.

The practical consequence: in arbitration, you are far more likely to go through a full evidentiary hearing, with all associated preparation, witness, and attorney costs, regardless of whether your opponent’s claim has legal merit. This can erode or eliminate the cost efficiency that is often cited as a benefit of arbitration.

Discovery Dynamics

Arbitration rules traditionally provided for limited document exchange and, in many cases, no depositions as a matter of right. This could be an advantage for defendants who prefer less disclosure. However, California’s SB 940 (discussed below) has significantly changed this calculus for consumer contracts governed by California law, now affording parties in California consumer arbitrations the same discovery rights they would have in civil court, including depositions, subject to the arbitrator’s approval.

No Evidence Rules

Arbitration proceedings do not apply the Federal Rules of Evidence or their state counterparts. A particularly damaging internal document, a problematic prior statement, or potentially privileged communication may be much harder to exclude in arbitration than in a court proceeding. For companies that carry litigation risk tied to internal communications, this can be a meaningful exposure.

Arbitration Fees Are A Critical Factor in Consumer Contexts

The cost structure of arbitration is one of the most consequential and least understood aspects of the decision to include an arbitration clause, and it differs substantially depending on whether your agreement invokes consumer rules, commercial rules, or the newer mass arbitration procedures that the major providers have adopted in recent years.

Court Is Not Free, But It Is Structurally Different

Filing a civil case in federal court costs a modest filing fee. Judges are compensated by the government. Discovery disputes are resolved by the court at no additional cost to the parties. None of this is true in arbitration, where the parties pay the arbitrator’s time, the administrative fees of the arbitration provider, and varying shares of case management costs depending on which rules govern.

Consumer Rules vs. Commercial Rules Create A Fundamental Divide

This is where the analysis splits sharply depending on your business context.

Under the consumer arbitration rules of the major providers the fee-shifting structure strongly favors the individual claimant. The consumer’s share of filing and administrative fees is nominally capped at a modest amount, and arbitrator compensation is borne almost entirely by the company. Both AAA and JAMS maintain Consumer Minimum Standards that operate as a floor regardless of what the parties’ contract says, meaning the company’s fee obligations in consumer arbitration are not fully contractable away. For a single consumer dispute, this is manageable. At scale, as discussed below, it is not.

The commercial rules present a fundamentally different picture. In B2B arbitration between sophisticated parties, fees are shared more symmetrically, scaling with the amount in dispute. Each side absorbs its own costs, and the overall process being faster and more contained than litigation can genuinely be cheaper for both parties. This is why the fee argument cuts in opposite directions depending on context: arbitration can be a genuine cost saver in commercial disputes while simultaneously being a structural liability in consumer-facing contexts.

Mass Arbitration and the Fee Weapon

The consumer fee structure is precisely what makes mass arbitration so financially devastating. Because each individual demand triggers its own company-side fee obligation including filing fees, case management fees, arbitrator appointment and compensation, a coordinated wave of thousands of simultaneous filings can generate aggregate fee exposure running into the tens of millions of dollars before a single merits hearing is held. This is not a theoretical risk. It is what happened to Amazon, DoorDash, Tubi, and a growing list of companies across gaming, streaming, privacy, and financial services.

Both AAA and JAMS restructured their mass arbitration fee schedules, replacing the per-case initiation structure with flat fees and introducing screening mechanisms intended to reduce the leverage that sheer filing volume previously created. These are meaningful reforms, but they come with important caveats: the new fee structures apply only when the parties’ arbitration agreement expressly incorporates the relevant mass arbitration rules by reference. A generic clause referencing AAA or JAMS’s standard rules, drafted before these changes, may not benefit from them. If you are drafting or updating an arbitration clause today, this is an active drafting consideration.

The bottom line: any business modeling the cost-benefit of a consumer arbitration clause needs to price in the fee asymmetry as a structural feature of the forum, not an anomaly and needs to think carefully about what happens to that exposure if mass arbitration ever materializes.

Mass Arbitration: The Game-Changer You Cannot Ignore

The mass arbitration problem is arguably the most significant development in dispute resolution strategy over the past decade, and it is accelerating. Understanding it is essential before inserting an arbitration clause into any consumer-facing agreement.

Here is the core dynamic: plaintiffs’ firms have discovered that the very feature that made arbitration attractive to companies, mandatory arbitration with individual claims only, no class actions, can be turned against those companies by filing thousands of individual arbitration demands simultaneously. Each demand triggers its own filing fee obligation (borne by the company), its own arbitrator appointment process, and its own administrative burden.

The seminal case is Abernathy v. DoorDash, Inc., No. C 19-07545 (N.D. Cal. 2020). In late 2019, Keller Postman (then Keller Lenkner) filed individual arbitration demands with AAA on behalf of over 6,000 DoorDash delivery drivers claiming misclassification. Under AAA’s relevant Arbitration Rules, DoorDash owed an approximately $1,900 filing fee per case. When DoorDash refused to pay roughly $12 million in aggregate fees and AAA closed the cases, the drivers sued to compel arbitration. Judge William Alsup of the Northern District of California had no mercy: DoorDash had “forced arbitration clauses and class-action waivers” on its workers and then “resorted to a class-wide lawsuit, the very device it denied to the workers, to avoid its duty to arbitrate.” DoorDash was ordered to pay approximately $9.5 million in arbitration fees. The judge’s rebuke was sharp: “You’re going to pay that money. You don’t want to pay millions of dollars, but that’s what you bargained to do and you’re going to do it.”

The DoorDash case was a watershed. It demonstrated that the mass arbitration lever was real, potent, and legally defensible.

The Tubi/Keller Postman Litigation: The Stakes Escalate

The mass arbitration ecosystem has grown substantially since DoorDash. In May 2024, Fox Corp. subsidiary Tubi filed suit against Keller Postman in D.C. federal court, alleging that the firm had filed nearly 24,000 individual arbitration demands with JAMS on behalf of Tubi users, alleging discrimination through targeted advertising, without properly investigating the individual merits of each claim. Keller demanded $71.2 million to settle, or roughly $3,000 per claimant. Tubi alleged it faced $48 million in non-refundable upfront JAMS fees if it did not settle. The litigation was settled confidentially but is illustrative of how mass arbitration has become a major business risk.

By 2024, over 280,000 individual arbitration demands were filed across major arbitration providers, targeting companies across gaming, streaming, healthcare, financial services, and technology. Industries covered by California’s CIPA (wiretapping), VPPA (video privacy), and BIPA (biometric privacy) statutes have been disproportionately targeted. In April 2026, Keller Postman began filing mass arbitration demands against Google/Alphabet on behalf of advertisers seeking over $218 billion tied to federal antitrust rulings, the largest mass arbitration campaign by dollar value ever attempted.

AI-Driven Mass Arbitration: The Next Frontier

If mass arbitration was already a serious concern for consumer-facing businesses, the integration of AI tooling into claimant acquisition and claim generation is pushing the threat curve significantly steeper. Plaintiffs’ firms increasingly use digital advertising and algorithmic client acquisition to recruit large populations of claimants at scale. AI is then used to generate individualized demands that are structurally identical but nominally personalized, allowing firms to file thousands of claims in a matter of days with minimal per-claim legal cost.

The result is that the marginal cost for a plaintiffs’ firm to file an additional arbitration demand continues to fall, while the cost per claim to the defendant company remains high. This asymmetry is the economic engine of mass arbitration, and AI is making it more powerful.

As mentioned previosuly, in response, the major arbitration providers have begun adapting. JAMS announced new Mass Arbitration Procedures and Guidelines in May 2024, providing for streamlined administrative processes and bellwether-style procedures when large numbers of similar claims are filed. AAA has similarly updated its rules. And companies have begun drafting contractual responses, building in bellwether provisions, batching protocols, and informal resolution prerequisites into their arbitration clauses, to manage the volume exposure. Whether these contractual defenses will be enforceable, and how courts will treat them, is still developing.

The practical implication: before inserting an arbitration clause with a class action waiver into your consumer terms, you must seriously analyze your exposure to mass arbitration. If your business has millions of users, if it touches privacy-sensitive data, if it operates in high-litigation states, and if plaintiffs’ firms have targeted your industry, the protection you thought you were buying against class actions may come at the price of mass arbitration exposure that is economically worse.

The Class Action Waiver Calculus: More Complicated Than It Looks

FAA Preemption Remains Powerful—But Is Not Absolute

The Concepcion–Italian Colors–Epic Systems trilogy remains the controlling framework: a valid arbitration agreement containing a class action waiver is generally enforceable under the FAA, and state laws that would otherwise invalidate such waivers as contrary to public policy are preempted. This framework continues to hold in most contexts and is the reason consumer companies have invested heavily in arbitration clauses.

The Standalone Class Action Waiver: A Recent Development

An intriguing alternative has emerged in the wake of mass arbitration concerns: could a company eliminate its arbitration clause entirely to avoid exposure to the cons of arbitrations such as fees for a company in the consumer context while retaining the benefits of a class action waiver? The theory is that even if the FAA doesn’t apply to the waiver (because there’s no arbitration agreement), the waiver still might be enforceable as a matter of contract law.

This is genuinely unsettled. In July 2024, the New Jersey Supreme Court held in Pace v. Hamilton Cove, 317 A.3d 477 (N.J. 2024), that a class action waiver in a residential lease without an accompanying arbitration clause was not per se contrary to public policy and was enforceable. The court emphasized that Concepcion does not confine class action waivers to the arbitration context.

However, other jurisdictions remain hostile. In Rhode Island, a federal court in Metcalfe v. Grieco Hyundai LLC held that a standalone class action waiver violated state public policy. California courts have treated standalone class action waivers as potentially unconscionable under Discover Bank in contexts not covered by the FAA. The landscape is jurisdiction-dependent and actively developing.

For businesses considering this path, the strategic benefit is real, but the legal risk is also real: you may end up with neither the protection of FAA preemption (which requires an arbitration clause) nor enforceable class waiver protection in hostile jurisdictions. The New Jersey Pace decision is important, but one state supreme court ruling does not a national safe harbor make.

Jurisdictional Complexity: California SB 940 and the EU

California SB 940 (Effective January 1, 2025)

California has been the most aggressive state regulator of consumer arbitration, and California SB 940 (signed in 2024, effective January 1, 2025) has significantly changed the compliance landscape for companies contracting with California consumers. Key provisions of SB 940:

Forum and Choice-of-Law Restrictions. For consumer contracts entered into, modified, or extended on or after January 1, 2025, companies may no longer require that California-arising claims be arbitrated outside California or under any state’s substantive law other than California’s. A contractual provision to the contrary is voidable by the consumer, and attorneys’ fees are available for consumers enforcing this right.

Mandatory Small Claims Carveout. If a consumer contract requires arbitration and the dispute qualifies for small claims court, the consumer must be given the option to proceed in small claims court instead. This is a significant procedural right that cannot be contracted away.

Expanded Discovery Rights. SB 940 amends existing California law to expressly authorize depositions (with arbitrator approval) and full civil discovery in consumer arbitrations, effectively giving parties the same discovery rights they would have if the matter were in California Superior Court. Prior California law had limited discovery in arbitration unless the agreement expressly allowed it. This significantly affects the cost and time dynamics of California consumer arbitrations.

Conflict of Interest Disclosures. The law imposes new disclosure requirements on arbitrators regarding solicitation activities and relationships with the parties and their counsel, targeting potential bias concerns in repeated-player arbitration systems.

It is important to note that due to the recency of this law, as of this writing we are not aware of California trial court or appellate decisions interpreting SB 940’s provisions, meaning practitioners are working in a gray zone. There are also open questions about FAA preemption of some of SB 940’s provisions, questions that will likely take years to resolve.

For any business that contracts with California consumers (which includes nearly all national consumer-facing businesses, given California’s size), the terms of your arbitration clause need careful review against SB 940’s requirements. A clause drafted before January 2025 may no longer be compliant.

International and EU Considerations

If your website or platform serves users in the European Union or United Kingdom, a mandatory U.S.-style arbitration clause in your terms of service raises significant enforceability concerns under EU law. Council Directive 93/13/EEC on Unfair Terms in Consumer Contracts identifies terms that require consumers to submit disputes exclusively to private arbitration bodies not covered by legal provisions as potentially unfair and therefore unenforceable. EU member states’ implementing legislation varies, but the broad principle is that consumers in the EU retain the right to access EU courts for consumer disputes.

Of note, the EU Dispute Resolution (ODR) Regulation established an online dispute resolution platform that required certain e-commerce businesses to provide a link to it but it was discontinued. Still, it signals the EU regulatory posture: consumer dispute resolution must be accessible, fair, and within the European legal framework.

Practical implication: if your terms state “all disputes shall be arbitrated under AAA rules in New York under New York law,” that provision is likely unenforceable against EU consumers for EU-law consumer protection claims. If your business has meaningful EU exposure as well as other jurisdictional expoure, you need a properly tailored international dispute resolution framework, not simply a U.S.-domestic arbitration clause applied globally.

How to Structure an Arbitration Clause If You Decide to Use One

If, after weighing all of the above, you decide that arbitration makes sense for your business, how you draft the clause matters enormously. Some key structural considerations:

Choice of Forum. AAA and JAMS are the dominant providers. They differ in fee structures, arbitrator pools, and procedural rules. For consumer disputes, the AAA Consumer Arbitration Rules and the JAMS Consumer Minimum Standards govern minimum procedural protections regardless of what your contract says. Selection of venue matters under California SB 940 (the arbitration must be in California for California-arising consumer claims).

Arbitrator Selection. Specify clearly how arbitrators are selected, how many arbitrators, the required qualifications, and how the parties will proceed if they cannot agree. For technically complex disputes, consider requiring arbitrators with relevant domain expertise.

Discovery Parameters. Define the discovery you expect. If you want limited document exchange and no depositions, say so though keep in mind that California SB 940 now overrides contractual discovery limitations for California consumer arbitrations.

Fee Allocation. AAA and JAMS consumer rules already impose minimum standards on who bears what fees. Your clause can go further in fee-shifting provisions (e.g., fee-shifting for frivolous claims or refusal to participate in a pre-arbitration informal resolution process). Pre-dispute informal resolution prerequisites, requiring the parties to engage in a good-faith informal process before filing, have been used as a friction mechanism against mass arbitration and have been upheld in some courts.

Bellwether/Batching Provisions. In response to mass arbitration risk, many companies have begun incorporating provisions that, when a large number of similar claims are filed, allow for a “bellwether” process and selecting a small number of representative cases to be arbitrated first, with the results informing or binding later proceedings. Whether these provisions are enforceable and under what circumstances is actively litigated.

Appeals Clause. If appellate rights matter to your business, consider opting into JAMS or AAA’s optional appellate procedures. This adds time and cost but provides a meaningful check on arbitral errors.

Class Action Waiver Language. If you include a class action waiver, it must be clear, conspicuous, and unambiguous. Some courts have required that class action waivers be called out in a specific, prominent manner and not buried in boilerplate.

Severability. Include a robust severability clause so that if any portion of the arbitration clause is found unenforceable (e.g., the class waiver in a particular jurisdiction), the rest of the clause hopefully survives.

Geographic Scope. Tailor the clause’s reach. If you serve EU users, consider whether the arbitration clause should expressly exclude disputes governed by EU consumer protection law as well as othe rjuridictions of relevance.

Key Questions Before You Decide

Given everything above, here is the framework we work through with clients considering whether to include an arbitration clause in their terms:

1. Who are your users? Business counterparties vs. consumers change almost every part of the analysis.
2. What kinds of disputes realistically arise? Contract disputes? Privacy claims? Product liability? Employment (if covered)? The likely claims profile shapes both the pros and the cons.
3. What is your class action exposure? If your business faces meaningful risk of consumer class actions, and many do, how does that weigh against the mass arbitration risk that a class waiver generates?
4. What is your user volume? A million users is very different from ten thousand when pricing mass arbitration exposure.
5. What jurisdictions matter most? California, in particular, has dramatically changed the calculus with SB 940. If you have EU users, international enforceability is a threshold question.
6. How are you presenting your terms? None of this matters if your arbitration clause is in a browsewrap agreement that courts will refuse to enforce.
7. How important is confidentiality? If your disputes involve trade secrets, proprietary data, or employment matters you need to keep private, arbitration’s confidentiality benefits are meaningful.
8. How important is appellate protection? If you are the type of business that cares deeply about being able to correct arbitral errors, because you have a strong legal position and cannot afford to lose on a bad arbitrator, you may need to opt into an appeals process, weigh the value of litigation’s appellate rights more highly, or reconsider arbitration altogether.
9. Is mass arbitration a realistic threat to your industry? Privacy, consumer technology, gaming, streaming, financial services, and gig economy platforms are currently high-target industries. If you operate in one of these and have millions of users, the DoorDash, Tubi, and other scenarios are not hypothetical, it is a known risk category.
10. What will a standalone class action waiver get you? In some jurisdictions, like New Jersey post-Pace, you may be able to retain a class waiver without an arbitration clause, avoiding the cons of arbitration while still limiting class litigation risk. But this is highly jurisdiction-specific and legally unsettled.

The Bottom Line

The question of whether to include an arbitration clause in your website terms among a range of other relevant considerations is no longer a default “yes” for consumer-facing businesses and it was never a simple calculation. The current landscape is defined by:

• The mass arbitration problem, which has weaponized the very individual-claim structure that made arbitration class-action-protective, and which AI-assisted claimant recruitment and claim generation is accelerating;
• California SB 940, which has expanded discovery rights for California consumer arbitrations, restricted forum and choice-of-law, and added mandatory small claims carve-outs, materially increasing the cost of consumer arbitrations under California law;
• Evolving jurisprudence on standalone class action waivers, which may offer an alternative path to class risk management without arbitration’s cost exposure, but which remains legally unsettled across jurisdictions;
• International complexity, which means a U.S.-domestic arbitration clause applied globally is a compliance problem, not a solution;
• The consistent principle that enforceability of the clause itself depends on how your terms are presented—with browsewrap at the bottom of the stack and scrollwrap at the top.

There are legitimate reasons to include a well-drafted arbitration clause in your terms, particularly in B2B contexts, for confidential or technically complex disputes, and where class action exposure is real, and mass arbitration risk is manageable. There are also legitimate reasons, given the current environment, to seriously consider whether the traditional consumer arbitration clause still serves your interests.

The right answer for your business requires a fact-specific analysis of your user base, dispute profile, jurisdictional exposure, and risk tolerance. It is not a boilerplate decision.

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