News

Mandatory Arbitration Clauses: article from Public Citizen Undermining the Rights of Consumers, Employees, and Small Businesses.

Today most Americans are bound by at least one mandatory, pre-dispute arbitration clause. Buried in the fine print of a billing insert, employee handbook, health insurance plan, or dealership or franchise agreement, these clauses waive one’s right to access the courts, diverting cases to a costly private legal system that favors defendants. Arbitration clauses are achieving their intended purpose—undermining consumer protection, civil rights, and other laws that level the playing field between big businesses and individuals. The individual is left with no choice but to waive these rights, because arbitration clauses are presented on a take-it-or-leave-it basis. 

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Don’t be a VICTIM

AADSC helped a client with an arbitration award that was 4 times greater than the original amount of the credit card debt.  Once an award has been made by the National Arbitration Forum, (NAF) the collector then files the award with the Superior court where the consumer resides.  Many times the documents filed with NAF are fictitious.  The unsuspecting consumer will receive a notice that they owe some exorbitant amount of money due to an arbitration award.  In some cases, the debt is time barred.

Below is a news article of the company that filed an award against an AADSC client.  We provided education to our client which resulted in a dismissed without prejudice ruling.  The client is also a party to the Lawsuit filed against Columbia Credit Services on behalf of the state of San Francisco.

San Francisco sues NAF, FIA Card Services and collector Columbia Credit Services

San Francisco Sues National Arbitration Forum, Collector and Issuer

by Burney Simpson

insideARM

April 8, 2008

The city of San Francisco has sued the National Arbitration Forum, the
collection agency Columbia Credit Services Inc. and FIA Card Services
claiming unfair and unlawful business practices.

The filing on March 24 by San Francisco City Attorney Dennis J. Herrara
charges that the NAF is an "arbitration mill, churning out arbitration
awards in favor of debt collectors and against California consumers."

According to the filing with Superior Court of the State of California,
the NAF "bends and breaks its own procedural rules in favor of its debt
collector clients."

The suit claims that the NAF rules in favor of business interests
against California consumers "100% of the time … (and) ceases using
arbitrators that decide in favor of consumers."

The law suit found that there were 33,933 consumer arbitration hearings
in California involving consumer collections from January 2003 though
March 2007. Of these, 18,075 went to a participatory or paper hearing
before an arbitrator. Only 30 of these cases resulted in favor of the
consumer, according to the suit.

The suit reports that FIA is a national bank based in Wilmington, Del.,
and successor to MBNA Corp., following its purchase by Band of America.
FIA issues cards to California consumers, according to the suit.
Columbia Credit is a debt purchaser and collection agency based in
Sacramento, Calif., according to the suit.

The suit charges FIA and Columbia with participating in NAF's "sham by
forcing consumers into the NAF forum which they know to be biased in
their favor." The suit also charges Columbia with seeking attorney fees
from consumers that lose an NAF arbitrated suit, "an unlawful business
practice" that abets NAF's activities.

The NAF released a statement that said it did not comment on active
litigation but that it is preparing its defense in the case. The Forum
said its "independent case administration and neutral decision makers
constitute a system that satisfies or exceeds objective standards of
fairness. Our arbitration program has been supported in numerous courts
in which it has been reviewed, and has frequently been praised by noted
members of the nation's judiciary, including the United States Supreme
Court."

The NAF also contended that studies have shown that "arbitration
outcomes are the same or better than court, where similar subject
matter is at issue. Arbitration provides all parties with the same
substantive outcomes as court, and does so more efficiently and less
expensively."

In addition, the NAF said its arbitrators "are former judges or
seasoned attorneys," who have "a sincere interest in helping parties
resolve disputes fairly and efficiently."

The filing follows a study released last year by consumer advocacy
group Public Citizen that found that NAF arbitrators ruled against
California consumers in 95 percent of cases filed ("Activists:
Mandatory Arbitration Stacks Deck Against Cardholders," Sept. 28, 2007.)

That is about as cool as it gets.  Leave it to San Francisco to file
this badly needed suit.  I don't even understand WHY a collector can
force consumers into arbitration.  I know that MBNA contracts required
mandatory arbitration, but this is weird.

And it's long been public knowledge that the arbitrators get paid by the creditors and rule for the creditors.