Thursday, April 17, 2008
Repeat Player Advantage
"An organization that helps resolve disputes between credit-card companies and their customers has been accused of disregarding the rights of consumers and favoring lenders in a lawsuit filed last month by the San Francisco city attorney. ... Companies such as credit-card issuers often prefer to resolve disputes with their customers through private arbitration, handled by one or a few lawyers known as arbitrators, rather than in court, in an effort to save time and money. ... From 2003 through March 31, 2007, 18,075 consumers' arbitrations in California were resolved through hearings conducted by the NAF, according to the suit, citing data reported by the NAF. Thirty of the matters, or fewer than 0.2% were won by consumers. 'NAF is actually in the business of ... churning out arbitration awards in favor of debt collectors,' reads the suit. ... But many plaintiffs lawyers and consumer advocates say that consumers are often forced into arbitration without adequately consenting, and that their recoveries can pale in comparison to jury verdicts", WSJ, 7 April 2008.
0.2%, wow! I'm sure NAF arbitrators are scrupulously fair. Of course, we might be seeing the "repeat player advantage" at work., i.e., NAF arbitrators side with the credit card companies over consumers since they will have continuing business from the former and in all likelihood, never encounter a particular consumer again. With the track record like that, I hope California puts the NAF out of business, at least within California.