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Article:
Business Week Article Lifts
the Veil on the Unfairness of Pre-dispute Arbitration Agreements in the
Credit Card Industry
Jacksonville Attorney - Lawyer,
providing experienced Consumer Protection, Family Law, Estate Law,
Employment Law, Business Law, and Bankruptcy Law legal
representation in Jacksonville, Hilliard, Duval County,
Nassau County and the surrounding Northeast Florida areas.
Last year
about this time, I wrote about the Arbitration Fairness
Act of 2007. Unfortunately, the bill is still being
bounced about in Congress and it is doubtful the
President would sign it even if it passed. The bill is
designed to address the apparent unfairness of a process
where a more sophisticated party is able to insert into
its agreements a provision requiring consumers to
arbitrate disputes that arise later.
Unfortunately,
consumer must often pay administrative fees and
arbitrators' fees which can be run into the thousands of
dollars. Most often, it is the corporation that chooses
which tribunal to use to arbitrate disputes. There may
be an inherent prejudice in favor of the corporation
which pays the arbitrator a fee to repeatedly preside
over matters involving them. This is known in the
industry as "repeat player bias" but it has been hard to
quantify.
Big business
has sought to attack these accusations as nothing more
than attorneys sore at losing an opportunity to earn
attorney’s fees. Meanwhile, more and more businesses
have included provisions in arbitration agreements that
seek to ban class actions. Class actions remain the only
method, aside from busy regulators getting involved, for
big business to be held accountable for their actions
for an extended time period and involving many people. A
business that would be threatened with criminal
prosecution for stealing a million dollars from an
elderly couple has much less to be concerned about if it
steals $399 from 2,500 people, especially if class
actions are effectively banned.
Until
recently, there has not been a lot of evidence as to
just how unfair the arbitration process can be because
arbitrations are usually private affairs and there is
very little oversight. However, Business Week just
published a compelling story of just how unfair the
arbitration process can be. In its June 5th edition, it
unveiled some of the abuse that consumers face with
arbitration provisions. It talked to insiders and
reviewed data recently made available because California
requires arbitration bodies to report who wins and other
details of arbitrations.
Low and
behold, it has been reported that creditors win 99.8
percent in cases handled by the National Arbitration
Forum, one of the largest arbitration bodies, in
California. Remarkably, this percentage is for those
cases decided "on the merits," which excludes many cases
were a party does not answer the arbitration and is
defaulted. In the article, NAF is quoted as saying 93.7%
are decided without consumers ever responding.
Arbitrators
recount how they were removed from other arbitrations
when they sided with consumers or wrote about how the
process was unfair. Some arbitrators admitted to
spending as little as four to five minutes per
arbitration. NAF is said to be the largest arbitration
body in the credit card collection business.
Anecdotal
evidence suggests fairness is not always its primary
concern. According to the Business Week article, "a
September, 2007, NAF PowerPoint presentation aimed at
creditors and labeled ‘confidential’ promises ‘marked
increase in recovery rates over existing collection
methods.’" If you think this stinks, and you should, you
may want to ask your Congressmen to support the
Arbitration Fairness Act by requiring that agreements to
arbitrate employment, consumer, franchise, or civil
rights disputes be made after the dispute has arisen.
Thus, the consumer, employee or civil rights victim
could negotiate an agreement that truly used a neutral
third party as the arbitrator, was not as costly and
still provided due process. Until then, don’t sign an
arbitration agreement unless you absolutely have to do
so.
Disclaimer: The above Article
is intended to give you, the consumer, insight into various legal topics. This
information is not intended as legal advice, but rather helpful topical
information.
 If
you require professional legal services regarding
Consumer Protection, Family Law, Estate Law,
Employment Law, Business Law, and Bankruptcy Law issues, be proactive in
protecting your legal
rights by seeking the legal advice of
an experienced
Jacksonville criminal defense attorney
& lawyer. Contact
The Law Offices of
Steven M. Fahlgren, P.A.,
by calling
904.845.2255.
Jacksonville Attorney - Lawyer,
providing experienced Consumer Protection, Family Law, Estate Law,
Employment Law, Business Law, and Bankruptcy Law legal
representation in Jacksonville, Hilliard, Duval County,
Nassau County and the surrounding Northeast Florida areas.
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