Businesses increasingly interact with vast numbers of individual customers, each engaging through what lawyers call “one-to-many” agreements. Increasingly, these contracts include clauses known as class action waivers, which prevent customers from banding together to file a lawsuit. Instead, disputes are resolved individually—often through arbitration.

The reasons for this trend are clear. Class action waivers offer companies predictability, efficiency, and cost savings, especially when compared to the high stakes and uncertainty of collective lawsuits. However, as these clauses become more common, questions are arising about how they impact consumers’ rights and access to justice. Are they a progressive, efficient solution, or do they risk undermining consumer protections?

The appeal: Efficiency and manageability for businesses

Incorporating a class action waiver in a contract offers considerable benefits for companies. For one, class action lawsuits can be financially burdensome, potentially opening companies up to massive liability from a single case. A waiver enables a more predictable dispute resolution process, which is easier to budget for and manage. When disputes are resolved individually, companies can respond to grievances directly without the reputational or financial risks tied to collective lawsuits.

Moreover, these waivers often steer disputes towards arbitration, which is generally faster and less expensive than traditional litigation. Arbitration can resolve issues in a matter of weeks or months rather than years, freeing up resources for companies and providing consumers with a potentially faster path to a decision. For corporations, particularly those operating on a large scale or with lean legal departments, class action waivers and arbitration are appealing options for managing both cost and risk.

The consumer perspective: What’s the trade-off?

However, class action waivers can feel restrictive from a consumer standpoint. Without the option to bring a collective lawsuit, individuals must pursue their claims alone. In many cases, the value of a single claim may be too small to justify the cost and effort of arbitration, discouraging consumers from seeking justice for smaller grievances. Historically, class actions have offered a mechanism for consumers to challenge widespread harms that might otherwise go unaddressed—an accountability tool that is diminished with individual-only disputes.

For many consumers, the feeling of solidarity in a class action—of being part of a larger group facing a common issue—is itself an empowering experience. Without it, each individual’s grievance becomes a separate struggle, which can weaken the deterrent effect that class actions provide.

Companies may argue that arbitration is just as effective, but for some consumers, the reality of going up against a corporation alone can feel isolating and overwhelming.

The middle ground: Context and customisation

The key to a balanced approach may lie in the design of the waiver itself. Rather than implementing waivers as blanket policies, companies can tailor their contracts to provide options.

A well-drafted class action waiver can make room for certain types of collective redress, particularly where patterns of harm are clear and systemic. For instance, contracts might include “opt-out” clauses, allowing consumers to choose collective action in specific cases, such as those involving safety risks or broader public impact.

From a legal drafting perspective, it’s also essential to consider regional compliance. Many jurisdictions have varying rules on the enforceability of these waivers, particularly for essential services or in contracts where bargaining power is uneven. In the European Union, for example, consumer protection laws make it difficult to enforce broad waivers, while in the United States, federal law supports them, especially in arbitration agreements.

Designing a waiver that respects both sides

For clients seeking to include class action waivers, a thoughtful approach can address both business and consumer concerns. Waivers should be transparent, and where possible, supported by alternative methods for consumers to resolve disputes quickly and fairly. For example, companies could build in strong customer support systems, internal dispute resolution options, or mediation services—features that help customers feel heard, even in the absence of collective litigation.

Ultimately, well-crafted waivers can balance efficiency with accountability, offering companies legal predictability without unduly limiting consumer rights. By giving consumers clarity on how disputes will be handled—and making room for options when needed—companies can retain the efficiency benefits of waivers while fostering trust and goodwill.

At ITLawCo, we specialise in designing balanced class action waivers that meet regulatory requirements, safeguard corporate interests, and consider consumers’ rights. We work closely with clients to draft clauses that maximise efficiency while remaining legally compliant across jurisdictions. Our approach ensures that waivers serve as both an effective legal tool and a responsible, transparent feature of your customer agreements. Whether you need a waiver crafted from scratch or an assessment of your existing clauses, ITLawCo can help guide your company towards a balanced, legally sound solution. Contact us today.