In a move to help protect Americans from being forced into arbitration that they did not voluntarily agree to, Minnesota Attorney General, Lori Swanson, sued the National Arbitration Forum (NAF), the country’s largest administrator of consumer arbitrations, on July 14, 2009, for consumer fraud, deceptive trade practices, and false advertising.
The lawsuit alleged that there were conflicting and biased ties between the NAF and debt-collection firms representing major credit card agencies, believed to include JP Morgan Chase, Citigroup, Discover Card, and American Express. The suit further alleged that New York hedge fund, Accretive LLC, owned stakes in both the collection firms and the NAF, sending arbitration business between the two. It has also been reported that the Attorney General uncovered additional allegations that the NAF would help creditors write cases.
Under the consent decree reached on July 17, 2009, the NAF will stop accepting new consumer arbitrations of any kind. The prohibited arbitrations include not only disputed credit-card debt, but other lines of business that the NAF has moved into, including arbitration of consumer debts in healthcare, telecommunications, utilities, mortgages, and consumer leases. In fact, the only disputes NAF can now arbitrate are Internet domain disputes.
We feel this is long overdue. Most credit card companies have included mandatory arbitration clauses in their credit card contracts, forcing the millions of Americans who own credit cards to arbitrate their disputes rather than seek justice through the court system.
Although arbitration is supposed to serve as a private judicial process which is fair, more efficient, and less costly than the court process, the Strom Law Firm has found that most arbitration provisions are hidden within contracts in boilerplate language that consumers typically do not even realize that they are agreeing to.
Hopefully, this settlement is just the beginning of a movement to protect our consumers, as Attorney General Lori Swanson is also sending a letter to the American Arbitration Association (AAA), a NAF competitor that has been trying to build up its credit-card arbitration business, asking them to exit the business pointing out that most consumers are unaware of what they are agreeing to.
In a press release issued by the NAF, the NAF expressed its disagreement with the settlement, stating, “the National Arbitration Forum provides fair and affordable access to justice to American consumers regardless of size of their claims. Without access to arbitration, consumer disputes will now be forced into an overcrowded and underfunded legal system, where many consumers who cannot afford attorneys will have to navigated complex court procedures….the consequence to American consumers is that there will be no meaningful alternative to costly and unpredictable litigation.” We feel that this could not be further from the truth.
You, as a consumer, should have the right to select the forum of your choice. We want to make sure that you are aware of three legislative proposals pending in both houses of Congress that if passed, will be a major victory for consumers everywhere.
• The Arbitration Fairness Act of 2009 would not prohibit arbitration, but rather require that agreements to arbitrate consumer, franchise, employment, or civil rights disputes be made after the dispute has arisen, ensuring that your agreement to arbitrate is strictly voluntary rather than cleverly disguised by a corporate giant in a binding agreement.
• The Fairness in Nursing Home Arbitration Act would eliminate pre-dispute mandatory arbitration provisions hidden in Nursing Home documents, which we point out are signed at one of the most stressful times of your life, placing a loved one in a nursing home.
• Legislation is also currently before the House to create a new Consumer Financial Protection Agency to address arbitration and maintain broad regulatory authority to restrict or eliminate all consumer arbitrations.
We urge you to contact your Congressional representatives and tell them that you want protection and the right to choose the forum of your choice.
If you feel that you have been taken advantage of by your credit card company, contact a consumer credit attorney to protect your rights.
Strom Law Firm is a personal injury and criminal defense law firm centrally located in Columbia, South Carolina. Our firm proudly handles personal injury, criminal defense, defective products, class actions, pharmaceutical liability, toxic torts, medical malpractice, nursing home neglect, workers compensation, social security, veteran’s benefits, qui tam, predatory lending, tax investigations, business litigation, and wills and estates. Our lawyers proudly edit the Columbia, South Carolina Injury Board as well as the Strom Law Blog as a pro bono effort to provide the public valuable information. Our lawyers are licensed in: South Carolina, New York, Georgia, Florida, and the District of Columbia.