Recently there was a very sizeable shake up over in Credit Card land which should have been a massive story but in some way slipped through the cracks.
Every single credit card agreement, the contract you sign before you can be sent a brand new credit card, has in it an arbitration clause. For those of you who don't know what that is, it simply means that if you have a dispute over your bill, you can have a 3rd party independent negotiator hear your side as well as the < href="http://newdebtrulesblog.com"/>credit card companies story and then settle the dispute. What is most valuable here is that the third party is unbiased; this way if there is a dispute, little old consumer with next to no means is on an even playing field as Mr. Super bank.
The leading arbitration forum that is being used for this function is called the National Arbitration Forum. It handles over 200,000 arbitration hearings each year. The forum is overflowing with ex lawyers and judges who now are making money as arbitrators. This is good for the consumer because they get access to quality-educated professionals to arbitrate that they likely otherwise could never afford. Seems like a great scheme. Well not so fast, as with most things, if you dig a little deeper under the facade, the truth comes out and as in this set of circumstances, many times the reality is not pretty.
Recently the Minnesota Attorney Generalfiled a complaint claiming fraud against the National Arbitration forum. The office claimed that only a very small fraction of the 200,000 cases each year ever actually ruled in favor of the consumer. In the suit, they alleged that the National Arbitration forum was in fact a front for the debt collectors and the banks and that the banks funded a hedge fund that invested heavily in the forum a few years back. So basically, the banks owned the Forum.
Now, it was also alleged that many of the lawyers and ex judges that sat on the forum were taking money form the debt collectors and banks in return for favorable rulings. It went as far as to argue that the lawyers and ex judges even helped create the cases of the debt collectors and banks that would then be presented in opposition to the customer while in arbitration with that very same lawyer or judge!
In plain English speak, the < href="http://newdebtrulesblog.com"/>credit card companies put arbitration clauses in every credit card contract. They then took over the army of judges and lawyers in the forum, influenced them, and had them in fact aid in presenting cases against the consumer. Is it any wonder that the percentage of cases that were ruled in favor of the consumer was so low? Is is surprising to you that the Minnesota AG files a fraud case once they found this out?
Here was the result and you draw your own conclusions :< /b>
The National Arbitration forum, after becoming the largest and most widely used forum for disputing credit card issues in the world, armed with an army of ex lawyers and judges, after getting the Minnesota Ag's complaint, shut it's doors within 4 days of being notified of the suit. 4 days.
The good news is the consumer will no longer be forced into a situation where the deck is already stacked against them. The challenge is, it's just another example of how you need to educate yourself against the challenging practices of the banks and debt collectors. Their TV commercial and tellers being the counter may sell he image of the friendly neighborhood bank. However, after this example, we think it is clear they are anything but.
