Minnesota Attorney General sues arbitration company that works with credit card industry
It was reported yesterday that the Attorney General of Minnesota had sued the Naitonal Arbitration Forum (NAF), the largest U.S. arbitration company for consumer credit disputes. Most credit card agreements contain fine print that waives a customer's rights to go to court over disputes and requires arbitration--on the company's terms--as an alternative. Many of these companies then contract with the NAF, or a company like it, to conduct the resulting arbitrations and most experts agree that consumers do not receive a "fair shake" in most of the resulting hearings.
Hearings are often scheduled with inadequate notice, in Minneapolis (despite the consumer's presence several thousand miles away) before a "judge" who is under pressure to side with the credict card company or bank. A Harvard Law School professor told authorities that she no longer was assigned to cases after she ruled in favor of a consumer. Some estimates claim that credit card companies win well over 90 percent of their hearings.
The Minnesota AG's lawsuit claims that the inherent bias in these relationships between credit card companies, debt collection companies, and arbitration providers, at least in the case of NAF, goes beyond an ugly familiarity to actual consumer fraud. The AG claims that NAF has extensive ties to the collection industry, including ownership ties, that make NAF's "independence and neutrality" claims a deceptive trade practice.