Lots of people think that they can avoid court by using mediation. The fact is that mediation is not for anyone disputing an amount less than tens or even hundreds of thousands of dollars. The reason is simple:
The cost of mediators is seriously high, often in the tens of thousands. If you're just a working person with a small claims dispute, mediation is out of the question.
Mediation is also not the best solution because most of the time, the mediator is not skilled in mediation at all. He's simply a person who has lots of experience in the field, which means he knows a lot about what the field has been like over the last few decades. Unfortunately, most mediators are retired, which also means they've been out of the loop for many years and may not be up to speed on the latest changes affecting your dispute.
This is one more reason why you want to avoid small claims court and use an online settlement service instead.
Since both arbitration and mediation are most likely to end up in some sort of compromise, the smart person goes straight to an online settlement service where the matter can be settled quickly and cost-effectively -- often for less than $20.
Leave the mediation to the huge companies who can afford lawyers and mediators. The vast majority of people are far better off with an online settlement service instead.