The Changing Legal Landscape of Cookie Banner Claims: Is Arbitration the Answer?

By Jared Berklee

Website cookie banners have become a ubiquitous part of internet browsing and are often overlooked by the average consumer. When cookies malfunction or a website operator fails to obtain proper user-consent, it creates risk for potential privacy-related litigation regarding misrepresentation of data-collection practices. In several recent class action lawsuits filed in California, plaintiff-users claim to have opted out of non-essential cookies, but malfunctioning cookie banners continued to log user information.[1] Often alleging unauthorized interception of their electronic communications under the California Invasion of Privacy Act (CIPA) or intrusion upon seclusion,[2] consumers have brought claims against a variety of entities, including those in retail, media, hospitality, telecommunications, fast-food, and beverage products.[3] It seems as if no industry with a public-facing website is safe. In the cookie-banner complaints filed to date, plaintiffs claim they had a reasonable expectation of privacy because defendants affirmatively represented that users could click to reject non-essential cookies before browsing the site.[4]

Historically, many websites included arbitration provisions in their terms of use to govern dispute resolution,[5] but mass arbitration poses an unanticipated challenge for those website operators relying on traditional arbitration provisions. The recent proliferation of privacy-related litigation surrounding the use of website tracking technologies is forcing operators to reconsider the most effective dispute resolution mechanisms to include in their terms.[6]

Arbitration has long provided streamlined alternative to litigation, offering simplified procedures and faster resolution at a lower cost than formal legal action. Despite these attempts to settle disputes expeditiously, the use of social media for attorney advertising and client solicitation has enabled the rise of mass arbitration.[7] Judges often cite the “twin goals of arbitration” as “settling disputes efficiently and avoiding long and expensive litigation,”[8] though the recent rise of mass arbitration has turned “a process built for efficiency into one straining under its own rules.”[9]

Many companies felt the 2018 U.S. Supreme Court decision in Epic Systems Corp. v. Lewis created a shield for corporate America, as the Court ruled that arbitration agreements prohibiting class action lawsuits and requiring individual arbitration are enforceable under the Federal Arbitration Act.[10] While some viewed this decision as affording corporations widespread immunity from many consumer claims—such as those relating to faulty cookie banners—savvy plaintiff’s firms responded by simultaneously filing thousands of nearly identical individual arbitration demands.[11] This practice has exposed companies to millions in administrative fees and resulted in large settlements, though courts thus far have allowed mass arbitrations to continue.[12]

How can companies adapt to the changing legal landscape? Many companies now require that claimants exhaust pre-arbitration procedures prior to initiating arbitration, increasing the difficulty of bringing swift mass arbitration.[13] Some also require that cases be sequentially arbitrated in batches, allowing the business to spread its fee obligations and liability over a longer horizon.[14] Companies may also consider requiring informal dispute resolution methods before arbitration or opting out of mandatory arbitration altogether.[15] Some businesses may even consider carving out data-privacy disputes from their general arbitration provisions to allow such disputes to be handled by the courts.[16]

Mass arbitration “can be more punishing than the class actions it replaced if companies are unprepared and haven’t built protections into their arbitration terms.”[17] In the absence of protections against coordinated pursuit of claims, companies can incur millions in administrative costs before a case is even evaluated on the merits, creating strong incentives to settle weak, untested, or frequently frivolous claims.[18]

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[1] Julie Rubash, Cookie Banner Malfunctions and Children’s Data Drive California Privacy Litigation: Dollar Tree and Paramount Face Class Actions, Sourcepoint (Nov. 13, 2025), https://sourcepoint.com/blog/cookie-banner-malfunctions-and-childrens-data-drive-california-privacy-litigation-dollar-tree-and-paramount-face-class-actions/ [https://perma.cc/N5EY-754H]; see also Christopher Brown, Luxottica Sued Over Data Sharing With Google, Meta, Others, Bloomberg L. (Dec. 23, 2025, at 13:15 ET), https://news.bloomberglaw.com/privacy-and-data-security/luxottica-sued-over-data-sharing-with-google-meta-others [https://perma.cc/K5FF-7J6N]; Christopher Brown, GoFundMe Hit With Suit Over Misleading Cookie Consent Banners, Bloomberg L. (Feb. 10, 2026, at 11:05 ET), https://news.bloomberglaw.com/privacy-and-data-security/gofundme-hit-with-suit-over-misleading-cookie-consent-banners [https://perma.cc/58PX-H8D2]

[2] Rubash supra note 1.

[3] Matthew Pearson, The Rise of the ‘Cookie Banner’ Class Action, IPWatchdog (Mar. 13, 2025, at 11:15 ET), https://ipwatchdog.com/2025/03/13/rise-cookie-banner-class-action/ [https://perma.cc/SUM2-FPQZ] (“In [cookie banner] lawsuits filed thus far, . . . claims include: Invasion of privacy under the California Constitution; Intrusion upon seclusion; Wiretapping under the California Invasion of Privacy Act (“CIPA”), Cal. Penal Code § 631; Use of a Pen Register under CIPA, Cal. Penal Code § 638.51; Common law fraud, deceit, and/or misrepresentation; Unjust enrichment; and Trespass to chattels.”).

[4] Id.

[5] The Changing Landscape of Dispute Resolution for Website Operators, Nat’l L. Rev. (Apr. 22, 2025), https://natlawreview.com/article/changing-landscape-dispute-resolution-website-operators [https://perma.cc/X7U9-FB98].

[6] Id.

[7] Allison Schoenthal et al., Mass Arbitration: The Risk Lurking in Consumer Agreements, Goodwin Law (Dec. 10, 2025), https://www.goodwinlaw.com/en/insights/publications/2025/12/insights-technology-cldr-mass-arbitration-the-risk-lurking-in-consumer-agreements [https://perma.cc/3T5W-6X23].

[8] See Folkways Music Publishers, Inc. v. Weiss, 989 F.2d 108, 111 (2d Cir. 1993).

[9] Schoenthal et al., supra note 7.

[10] Epic Sys. Corp. v. Lewis, 584 U.S. 497, 502 (2018).

[11] Richard Frankel, Fighting Mass Arbitration: An Empirical Study of the Corporate Response to Mass Arbitration and Its Implications for the Federal Arbitration Act, 78 Vand. L. Rev. 133, 234 (2025) (noting that the ability to insert class action bans was originally viewed as bestowing companies with “widespread immunity” until advocates began filing thousands of individual arbitration demands).

[12] Id. at 133 (observing that mass arbitration has exposed corporations to “millions of dollars in filing fees” and that “courts so far have allowed mass arbitrations to occur”).

[13] Id. at 158–62 (on pre-arbitration requirements).

[14] Id. at 162–67 (on batching and bellwether requirements).

[15] The Changing Landscape of Dispute Resolution for Website Operators, supra note 5.

[16] Id.

[17] Schoenthal et al., supra note 7.

[18] Id.