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What is arbitration? You sign away rights. Is that OK?

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Mark Lennihan/AP/File

(Read caption) In this October file photo, a man using a cellphone passes an AT&T store in New York. When you sign up for a cellphone or checking account, it's likely that you sign an arbitration clause, which means giving up the right to sue the company in the event of a dispute.

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If you have applied for a checking account, cellphone, or credit card, you have probably signed away some of your rights.

You may not even be aware that you have. In many cases, consumers agree to an arbitration clause that forfeits their right to a jury trial or class-action lawsuit if something goes wrong.

That means that if your cellphone carrier overbills you, you can't take the company to court. If the credit card company isn't moving to resolve a dispute, a threat to sue probably won't get you anywhere. Instead, you've agreed to have your case heard before an arbitrator who will make a binding decision.

Is that a good thing?

Companies that use arbitration clauses claim that the process is fair, and that it is faster and less expensive than litigation. It's also quite popular.

Of the 265 types of checking accounts offered by the 10 biggest banks, all but 10 required accountholders to waive the right to a jury trial, according to a 2010 study by the Pew Safe Checking in the Electronic Age Project. For 189 of those accounts, they also had to agree to have the dispute settled before a private arbiter chosen by the bank.

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