Saturday, August 8, 2009

Arbitration RIP

"Two major arbitration firms are backing away from the business of resolving disputes between customers and their credit-card and cellphone companies, throwing into disarray a controversial system that prevents unhappy customers from filing lawsuits. ... The National Arbitration Forum [NAF] said companies prevail over consumers in 94% of such cases. Credit-card companies defend those results, arguing that there is typically a long paper trail proving the customers owe the amounts in dispute. ... Although arbitration long has been controversial, the current situation developed rapidly starting last week when the Minnesota attorney general's office sued the [NAF], based in St. Louis Park, Minn., over the way it handled disputes. Among other things, the lawsuit contended that the NAF didn't disclose that it has financial ties to the debt-collection industry, violating Minnesota laws against consumer fraud, deceptive trade practices and false advertising. ... 'This is an issue beyond any one problem company,' said Minnesota Attorney General Lori Swanson. 'It is a systematic industrywide problem. Consumers are giving away rights without even knowing it.' An official with the [American Arbitration Association] AAA said the group, which is a not-for-profit, will stop taking debt-collection arbitrations 'until some standards of safeguards are established. A spokeswoman for NAF, a closely held, for-profit company said it made the decision to stop doing credit-card arbitrations because it was being hit with a wave of lawsuits", my emphasis, Robin Sidel and Amol Sharma at the WSJ, 22 July 2009, link:

I'm glad to see this. Do I smell a RICO association in fact here? Plaintiffs' bar, start your engines. As Basil Hart says, "Nothing can deceive like a document". This is another "Graffam" moment. Paper trails do not impress me. If anyone wonders why we need federalism, I ask, where were the Feds on this? See my 26 June 2008 post:

1 comment:

Anonymous said...

Please unrig this system.

Great to about Lori Swanson.