 The Data published in Public Citizen report are just taking breath away: consumers, who decided to submit to arbitration the disputes with their credit card providers, lost in 95% of cases in California, over a four-year period. Striking, why so high percentage in one side’s favor? That 95% sure suggested a dirty little industry secret. Now, consumer (individual) against giant (bank or card issuer). And what it arbitration? The hearing and determination of a dispute by an impartial referee agreed to by both parties. Yet, as it occurs in California, a consumer who seek for justice will not find it Binding Mandatory Arbitration (BMA).
To follow the case in the credit card industry, lets see what are these disputes that consumers are losing the battles on. Well, most of those cases was related to collection issues. Do you owe, or you don’t? The credit card issuer says you owe, and next, try to get that money through an arbitration process.
The National Arbitration Forum.
And let’s take, under magnifier, a single firm, the National Arbitration Forum (NAF). It’s one of the biggest arbitration company for the credit card industry. The NAF adjudicated in favor of the credit card companies 95% of cases. But what is even more interesting, 90% of the NAF cases were leaded by only 28 arbitrators, who awarded businesses $185 million. Studying further the NAF cases, it occurs, that One arbitrator handled 68 cases in a single day. If one arbitrator worked 8 hours, it would give one arbitration every seven minutes, and beside, ruled for the business in each case, awarding 100% of the money requested. Can such arbitration be fair? Is there a time to judge? Does always card provider have the right?
If not arbitration – maybe court?
In front of such data, you could think about passing round the arbitration firms and submitting the dispute directly to court. Ouch! In fact if you signed up the fine print for a credit card (or this could be many other services, like cell phones), then you agreed to what was written there. So before you pour out the cash for bringing legal action, better read once again what you have signed. It’s common, that such license contain also agreement to arbitration. Sometimes, by signing, you’re even giving up the right to a trial with a jury of your peers.
What sounds even worse, credit card companies choose the arbitrators, which are on average some firms making lot of money from the credit card companies. In such situation can you already answer, how will the arbitration company rule things? Certainly not for consumer, certainly for the card company, which will come back again with other case. That’s actually a conflict of interests, between you, as a consumer, and the arbitration firm, which wants to get more money from card company. And hey! Here the whole process is no longer impartial!
Now, it’s not only that you must pay whatever they say you owe. You must also pay for taking part in judgment. This costs $1,000 or more.
Yet some good news for the end.
The Congress is considering this situation: the Arbitration Fairness Act of 2007 (S. 1782 and H.R. 3010) has been introduced by Sen. Russ Feingold (D-Wis.) and Rep. Hank Johnson (D-Ga.) in 2007. This is the innovatory act, that intend to prevent a party with greater power from forcing individuals into arbitration through a contract. It means that a consumer should have free choice between arbitration and the traditional civil court system, and would get it "by requiring that agreements to arbitrate employment, consumer, franchise, and civil rights disputes be made after a dispute has arisen".
It might be good idea to let the senators know what you think of this topic and the pending legislation. Meanwhile, if you really need credit card, seek for one with passable number of consumer problems. Those, for instance, are: Discover Financial Services, American Express, yet check it well on your own. |
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