National Arbitration Forum
Encyclopedia
The National Arbitration Forum (NAF), founded in 1986, provides arbitration
and mediation
services to businesses, based at its Minneapolis, Minnesota
headquarters and offices in New Jersey
. The company is one of the United States's largest and most controversial dispute resolution
companies. The company has attracted widespread controversy because businesses frequently force consumers and employees to pursue their disputes through NAF by means of mandatory binding arbitration clause
s in adhesion contracts. The company maintains a panel of over 1,600 arbitrators and mediator
s who are attorneys
and former judge
s located across the United States
and in 35 countries around the world. Panelists arbitrate and mediate the disputes.
The company is an "approved" dispute resolution
service provider of ICANN
domain name
disputes and has handled more than 7,600 cases.
, NAF has administered over 10,000 domain name
disputes since 1999. The number of domain name disputes administered is on the rise, up 143 cases from 2006 to 2007. NAF deals predominantly with registered domain names that are abused by parties who have no legitimate rights to them. Some of the famous trademark
s involved in NAF domain name dispute resolutions include Los Angeles Angels, Disney, Hershey's Kisses, Jimmy Buffett
, and Univision
.
who has a credit card or cell phone, or who builds a house, gets a job, or buys a computer has agreed unknowingly to settle any dispute through binding mandatory arbitration (BMA).
An April 21, 2008 article in the Wall Street Journal delved deeper into the allegations of bias on the part of NAF. More than other arbitration providers, NAF works with "a few large companies, such as credit-card issuers, who potentially have disputes with many consumers," said Jean Sternlight, a law professor at the University of Nevada, Las Vegas
who specializes in arbitration. Says Sternlight: An NAF arbitrator "can expect to see many disputes involving the same company, there may be a heightened pressure on the arbitrator to rule in favor of the company or else risk losing future arbitration work". The Journal notes that one California appellate court
ruled that an employee whose employer required all employee disputes to go before NAF did not have to arbitrate his discrimination claim. The court said the employer enjoyed a possible "repeat player" advantage, including "knowledge of the arbitrators' temperaments, procedural preferences, styles and the like, and the arbitrators' cultivation of further business".
In its June 16, 2008 cover story, Business Week published an in depth look at credit collection arbitrations at NAF. The story explains how NAF markets itself to collection lawyers and then works with them in ways that raise questions about its impartiality.
recently conducted an eight-month examination into the credit card industry's use of pre-dispute binding mandatory arbitration based on all available data from the National Arbitration Forum. Public Citizen examined court records and scholarship on arbitration and comprehensively crunched data for all 33,948 cases in the National Arbitration Forum’s California records. The Public Citizen report found that the credit card industry relies heavily on binding mandatory arbitration to enforce its will. The National Arbitration Forum identified virtually all of its California
cases as "collection" cases filed against consumers by credit card companies or firms that buy debts for cents on the dollar. Fifty-three percent of those cases involved MBNA
credit cardholders. All but 118 of the National Arbitration Forum cases in California were filed against consumers by credit cards or debt collectors. Thus, the report found that consumers chose to bring only 118 cases before the National Arbitration Forum, while corporations chose the National Arbitration Forum nearly 34,000 times – 99.6% of the total cases.
In the more than 19,000 cases in which the National Arbitration Forum appointed an arbitrator, 94 percent of the decisions were in favor of the business and against the consumer.
Arbitrators also have a strong financial incentive to rule in favor of companies that file cases against consumers because those companies are their most loyal customers, and a busy arbitrator can make hundreds of thousands of dollars a year. Arbitrators routinely charge $400 or more an hour. Top arbitrators can charge up to $10,000 per day, and some make $1 million a year. In comparison, California Superior Court judges earn $170,000 a year.
The deck also is stacked against consumers by the same financial incentives. The slate of arbitrators is chosen by National Arbitration Forum, and the National Arbitration Forum is, in turn, chosen as the arbitration firm of choice by credit card giant MBNA. It is highly unlikely that MBNA would pick an arbitration firm that produces results MBNA does not like.
In California, a small, busy cadre of 28 arbitrators handled nearly nine of every 10 National Arbitration Forum cases. This group ruled for businesses 94 percent of the time. Another 120 arbitrators handled slightly more than 10 percent of the cases in which an arbitrator was assigned. They ruled for businesses 86% of the time and for consumers 10%. Outside of California, there is little information that would allow consumers to even begin to assess the bias of an arbitrator because California is the only state with any disclosure law on the books.
Companies do not choose arbitrators who do not rule in their favor. One former National Arbitration Forum arbitrator, a Harvard law professor named Elizabeth Bartholet, was blackballed after she awarded $48,000 to a consumer in a case brought by a credit card company. After the same company had her removed from other pending cases, she resigned, citing the National Arbitration Forum’s "apparent systematic bias in favor of the financial services industry".
Unlike court proceedings, arbitration hearings are secret. Its arbitrators generally do not issue a written decision unless one of the parties specifically requests and pays for it in advance. In one case examined in the Public Citizen report, a three-page decision cost $1,500.
Critics also charge that, arbitration violates due process
safeguards. The National Arbitration Forum limits parties’ access to key information that they would be allowed to obtain in court. The law makes it nearly impossible for consumers to appeal adverse decisions by arbitrators.
A July 2008 industry-supported Navigant analysis of Public Citizen data claimed that 26,665 arbitrations out of a total of 33,948 arbitrations were either heard or dismissed (i.e. excluding settlements). Of these 26,665 arbitrations, the industry analysis claimed that consumer parties were reported to have prevailed outright or had the case against them dismissed in 8,558 cases (32.1%). Claims against consumers were reduced by NAF in an additional 4,376 cases (16.4%). In order to aid comparisons to figures
presented by Public Citizen, the analyses used the NAF data covering January 2003 through March 2007. These are the data that Public Citizen has made available in spreadsheet format on the Public Citizen website ("Public Citizen Data"). The Public Citizen data contains information for 33,948 arbitrations.
In March 2010, a study of the National Arbitration Forum's record of panelist appointments for domain name disputes was published. It raised concern that a small handful of the NAF's roster panelists were appointed to hear a vastly disproportionate number of cases. In one instance, a single panelist was appointed to hear 949 cases, or about 10% of all NAF domain name dispute cases ever heard.
Russ Feingold
of Wisconsin
and Congressman Hank Johnson
of Georgia
, together with numerous co-sponsors in both Houses, recently introduced the Arbitration Fairness Act (S. 931, H.R. 1020) in the U.S. Congress. The Bill would prohibit mandatory pre-dispute binding arbitration in consumer, employment, and franchise
disputes. Parties to a dispute would still be able to choose arbitration over court if they wanted to, but individuals would be given a choice in the matter and would not be denied their constitutional right to access the courts and have a jury trial
. The bill is supported by the groups such as Public Citizen, Center for Responsible Lending, Consumer Federation of America, Homeowners of Texas, Homeowners Against Deficient Dwellings, Home Owners for Better Building, National Association of Consumer Advocates, National Consumer Law Center
, National Consumer Coalition for Nursing Home Reform, National Employment Lawyers Association, and American Association for Justice. Opposition to the bill is led by the U.S. Chamber of Commerce's Institute for Legal Reform
.
. Dani Liblang a consumer lawyer based in Birmingham, MI said, “The National Arbitration Forum was in the pockets of the big banks. It would just rubber-stamp whatever the banks wanted in the credit disputes.”
The Minnesota Attorney General brought an enforcement action against NAF, alleging that it had “actively encouraged” credit card issuers to place mandatory arbitration clauses in their contracts naming the forum as the arbitrator. The suit also alleges that a group of hedge funds with ties to a large debt-collection agency called Axiant owns a stake in the forum through an entity created to hide the connection. Nearly 60 percent of the debt collection claims handled in 2006 by the National Arbitration Forum had been filed by an Axiant predecessor, according to the Attorney General.
The National Arbitration Forum "has extensive ties to the debt-collection industry," the Attorney General said at a press conference. "This is not an independent company and it needs to cease telling the public that it is."
"This is as big of a case as I've ever filed as attorney general," Swanson said. “These practices attack the foundation of our legal system.” The suit alleges violations of state consumer fraud, deceptive trade practices and false advertising laws.
The National Arbitration Forum defended its practices, saying that the arbitrators it contracts with are "independent," ensuring the "impartiality" of arbitration.
In response to the suit, NAF and the Minnesota Attorney General reached a settlement, in which The National Arbitration Forum agreed to stop accepting new credit card arbitration claims by 24 July 2009.
Arbitration
Arbitration, a form of alternative dispute resolution , is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons , by whose decision they agree to be bound...
and mediation
Mediation
Mediation, as used in law, is a form of alternative dispute resolution , a way of resolving disputes between two or more parties. A third party, the mediator, assists the parties to negotiate their own settlement...
services to businesses, based at its Minneapolis, Minnesota
Minneapolis, Minnesota
Minneapolis , nicknamed "City of Lakes" and the "Mill City," is the county seat of Hennepin County, the largest city in the U.S. state of Minnesota, and the 48th largest in the United States...
headquarters and offices in New Jersey
New Jersey
New Jersey is a state in the Northeastern and Middle Atlantic regions of the United States. , its population was 8,791,894. It is bordered on the north and east by the state of New York, on the southeast and south by the Atlantic Ocean, on the west by Pennsylvania and on the southwest by Delaware...
. The company is one of the United States's largest and most controversial dispute resolution
Dispute resolution
Dispute resolution is the process of resolving disputes between parties.-Methods:Methods of dispute resolution include:* lawsuits * arbitration* collaborative law* mediation* conciliation* many types of negotiation* facilitation...
companies. The company has attracted widespread controversy because businesses frequently force consumers and employees to pursue their disputes through NAF by means of mandatory binding arbitration clause
Arbitration clause
An arbitration clause is a commonly used clause in a contract that requires the parties to resolve their disputes through an arbitration process...
s in adhesion contracts. The company maintains a panel of over 1,600 arbitrators and mediator
Mediation
Mediation, as used in law, is a form of alternative dispute resolution , a way of resolving disputes between two or more parties. A third party, the mediator, assists the parties to negotiate their own settlement...
s who are attorneys
Lawyer
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
and former judge
Judge
A judge is a person who presides over court proceedings, either alone or as part of a panel of judges. The powers, functions, method of appointment, discipline, and training of judges vary widely across different jurisdictions. The judge is supposed to conduct the trial impartially and in an open...
s located across the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and in 35 countries around the world. Panelists arbitrate and mediate the disputes.
The company is an "approved" dispute resolution
Dispute resolution
Dispute resolution is the process of resolving disputes between parties.-Methods:Methods of dispute resolution include:* lawsuits * arbitration* collaborative law* mediation* conciliation* many types of negotiation* facilitation...
service provider of ICANN
ICANN
The Internet Corporation for Assigned Names and Numbers is a non-profit corporation headquartered in Marina del Rey, California, United States, that was created on September 18, 1998, and incorporated on September 30, 1998 to oversee a number of Internet-related tasks previously performed directly...
domain name
Domain name
A domain name is an identification string that defines a realm of administrative autonomy, authority, or control in the Internet. Domain names are formed by the rules and procedures of the Domain Name System ....
disputes and has handled more than 7,600 cases.
History
The NAF was founded in 1986 as a subsidiary of another company, Equilaw, which subsequently went bankrupt in 1994. NAF survived the bankruptcy and appears to have grown rapidly in recent years. The NAF and Lawyers Associated Worldwide (LAW) work together on an international level. The National Arbitration Forum is located in Minneapolis, Minnesota.Domain name disputes
An approved domain name dispute program provider for ICANNICANN
The Internet Corporation for Assigned Names and Numbers is a non-profit corporation headquartered in Marina del Rey, California, United States, that was created on September 18, 1998, and incorporated on September 30, 1998 to oversee a number of Internet-related tasks previously performed directly...
, NAF has administered over 10,000 domain name
Domain name
A domain name is an identification string that defines a realm of administrative autonomy, authority, or control in the Internet. Domain names are formed by the rules and procedures of the Domain Name System ....
disputes since 1999. The number of domain name disputes administered is on the rise, up 143 cases from 2006 to 2007. NAF deals predominantly with registered domain names that are abused by parties who have no legitimate rights to them. Some of the famous trademark
Trademark
A trademark, trade mark, or trade-mark is a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify that the products or services to consumers with which the trademark appears originate from a unique source, and to distinguish its products or...
s involved in NAF domain name dispute resolutions include Los Angeles Angels, Disney, Hershey's Kisses, Jimmy Buffett
Jimmy Buffett
James William "Jimmy" Buffett is a singer-songwriter, author, entrepreneur, and film producer. He is best known for his music, which often portrays an "island escapism" lifestyle. Together with his Coral Reefer Band, Buffett's musical hits include "Margaritaville" , and "Come Monday"...
, and Univision
Univision
Univision is a Spanish-language television network in the United States. It has the largest audience of Spanish language television viewers according to Nielsen ratings. Randy Falco, COO, has been in charge of the company since the departure of Univision Communications president and CEO Joe Uva...
.
Controversy
Consumer advocacy groups and attorneys frequently claim that the National Arbitration Forum is the most biased against consumers of the major arbitration organizations. Recent studies of the National Arbitration Forum arbitrations demonstrate that in arbitrations between consumers and businesses, 99 percent of the National Arbitration Forum's decisions are in favor of the business. The National Arbitration Forum and its proponents claim that arbitration offers businesses a preferred way to resolve legal disputes without going to court because it offers "efficiency and simplicity". Consumer advocates counter that arbitration is usually imposed by businesses on consumers, employees, and other individuals who have no choice in the matter. Businesses insert contract provisions, known as mandatory binding arbitration clauses, into their contracts. These arbitration clauses prohibit consumers or employees from raising any claim in court. Virtually every AmericanUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
who has a credit card or cell phone, or who builds a house, gets a job, or buys a computer has agreed unknowingly to settle any dispute through binding mandatory arbitration (BMA).
An April 21, 2008 article in the Wall Street Journal delved deeper into the allegations of bias on the part of NAF. More than other arbitration providers, NAF works with "a few large companies, such as credit-card issuers, who potentially have disputes with many consumers," said Jean Sternlight, a law professor at the University of Nevada, Las Vegas
University of Nevada, Las Vegas
University of Nevada-Las Vegas is a public, coeducational university located in the Las Vegas suburb of Paradise, Nevada, USA. The campus is located approximately east of the Las Vegas Strip. The institution includes a Shadow Lane Campus, located just east of the University Medical Center of...
who specializes in arbitration. Says Sternlight: An NAF arbitrator "can expect to see many disputes involving the same company, there may be a heightened pressure on the arbitrator to rule in favor of the company or else risk losing future arbitration work". The Journal notes that one California appellate court
Appellate court
An appellate court, commonly called an appeals court or court of appeals or appeal court , is any court of law that is empowered to hear an appeal of a trial court or other lower tribunal...
ruled that an employee whose employer required all employee disputes to go before NAF did not have to arbitrate his discrimination claim. The court said the employer enjoyed a possible "repeat player" advantage, including "knowledge of the arbitrators' temperaments, procedural preferences, styles and the like, and the arbitrators' cultivation of further business".
In its June 16, 2008 cover story, Business Week published an in depth look at credit collection arbitrations at NAF. The story explains how NAF markets itself to collection lawyers and then works with them in ways that raise questions about its impartiality.
Public Citizen study
The non-profit consumer advocacy group Public CitizenPublic Citizen
Public Citizen is a non-profit, consumer rights advocacy group based in Washington, D.C., United States, with a branch in Austin, Texas. Public Citizen was founded by Ralph Nader in 1971, headed for 26 years by Joan Claybrook, and is now headed by Robert Weissman.-Lobbying Efforts:Public Citizen...
recently conducted an eight-month examination into the credit card industry's use of pre-dispute binding mandatory arbitration based on all available data from the National Arbitration Forum. Public Citizen examined court records and scholarship on arbitration and comprehensively crunched data for all 33,948 cases in the National Arbitration Forum’s California records. The Public Citizen report found that the credit card industry relies heavily on binding mandatory arbitration to enforce its will. The National Arbitration Forum identified virtually all of its California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
cases as "collection" cases filed against consumers by credit card companies or firms that buy debts for cents on the dollar. Fifty-three percent of those cases involved MBNA
MBNA
MBNA Corporation was a bank holding company and parent company of wholly owned subsidiary MBNA America Bank, N.A., headquartered in Wilmington, Delaware, prior to being acquired by Bank of America in 2006...
credit cardholders. All but 118 of the National Arbitration Forum cases in California were filed against consumers by credit cards or debt collectors. Thus, the report found that consumers chose to bring only 118 cases before the National Arbitration Forum, while corporations chose the National Arbitration Forum nearly 34,000 times – 99.6% of the total cases.
In the more than 19,000 cases in which the National Arbitration Forum appointed an arbitrator, 94 percent of the decisions were in favor of the business and against the consumer.
Arbitrators also have a strong financial incentive to rule in favor of companies that file cases against consumers because those companies are their most loyal customers, and a busy arbitrator can make hundreds of thousands of dollars a year. Arbitrators routinely charge $400 or more an hour. Top arbitrators can charge up to $10,000 per day, and some make $1 million a year. In comparison, California Superior Court judges earn $170,000 a year.
The deck also is stacked against consumers by the same financial incentives. The slate of arbitrators is chosen by National Arbitration Forum, and the National Arbitration Forum is, in turn, chosen as the arbitration firm of choice by credit card giant MBNA. It is highly unlikely that MBNA would pick an arbitration firm that produces results MBNA does not like.
In California, a small, busy cadre of 28 arbitrators handled nearly nine of every 10 National Arbitration Forum cases. This group ruled for businesses 94 percent of the time. Another 120 arbitrators handled slightly more than 10 percent of the cases in which an arbitrator was assigned. They ruled for businesses 86% of the time and for consumers 10%. Outside of California, there is little information that would allow consumers to even begin to assess the bias of an arbitrator because California is the only state with any disclosure law on the books.
Companies do not choose arbitrators who do not rule in their favor. One former National Arbitration Forum arbitrator, a Harvard law professor named Elizabeth Bartholet, was blackballed after she awarded $48,000 to a consumer in a case brought by a credit card company. After the same company had her removed from other pending cases, she resigned, citing the National Arbitration Forum’s "apparent systematic bias in favor of the financial services industry".
Unlike court proceedings, arbitration hearings are secret. Its arbitrators generally do not issue a written decision unless one of the parties specifically requests and pays for it in advance. In one case examined in the Public Citizen report, a three-page decision cost $1,500.
Critics also charge that, arbitration violates due process
Due process
Due process is the legal code that the state must venerate all of the legal rights that are owed to a person under the principle. Due process balances the power of the state law of the land and thus protects individual persons from it...
safeguards. The National Arbitration Forum limits parties’ access to key information that they would be allowed to obtain in court. The law makes it nearly impossible for consumers to appeal adverse decisions by arbitrators.
A July 2008 industry-supported Navigant analysis of Public Citizen data claimed that 26,665 arbitrations out of a total of 33,948 arbitrations were either heard or dismissed (i.e. excluding settlements). Of these 26,665 arbitrations, the industry analysis claimed that consumer parties were reported to have prevailed outright or had the case against them dismissed in 8,558 cases (32.1%). Claims against consumers were reduced by NAF in an additional 4,376 cases (16.4%). In order to aid comparisons to figures
Number
A number is a mathematical object used to count and measure. In mathematics, the definition of number has been extended over the years to include such numbers as zero, negative numbers, rational numbers, irrational numbers, and complex numbers....
presented by Public Citizen, the analyses used the NAF data covering January 2003 through March 2007. These are the data that Public Citizen has made available in spreadsheet format on the Public Citizen website ("Public Citizen Data"). The Public Citizen data contains information for 33,948 arbitrations.
In March 2010, a study of the National Arbitration Forum's record of panelist appointments for domain name disputes was published. It raised concern that a small handful of the NAF's roster panelists were appointed to hear a vastly disproportionate number of cases. In one instance, a single panelist was appointed to hear 949 cases, or about 10% of all NAF domain name dispute cases ever heard.
Proposed arbitration legislation
SenatorUnited States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
Russ Feingold
Russ Feingold
Russell Dana "Russ" Feingold is an American politician from the U.S. state of Wisconsin. He served as a Democratic party member of the U.S. Senate from 1993 to 2011. From 1983 to 1993, Feingold was a Wisconsin State Senator representing the 27th District.He is a recipient of the John F...
of Wisconsin
Wisconsin
Wisconsin is a U.S. state located in the north-central United States and is part of the Midwest. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake Michigan to the east, Michigan to the northeast, and Lake Superior to the north. Wisconsin's capital is...
and Congressman Hank Johnson
Hank Johnson
Henry C. "Hank" Johnson Jr. is the U.S. Representative for , serving since 2007. He is a member of the Democratic Party. The district is based in DeKalb County, a largely suburban county east of Atlanta. It also includes portions of Gwinnett and Rockdale counties.-Life, education and...
of Georgia
Georgia (U.S. state)
Georgia is a state located in the southeastern United States. It was established in 1732, the last of the original Thirteen Colonies. The state is named after King George II of Great Britain. Georgia was the fourth state to ratify the United States Constitution, on January 2, 1788...
, together with numerous co-sponsors in both Houses, recently introduced the Arbitration Fairness Act (S. 931, H.R. 1020) in the U.S. Congress. The Bill would prohibit mandatory pre-dispute binding arbitration in consumer, employment, and franchise
Franchising
Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a verb....
disputes. Parties to a dispute would still be able to choose arbitration over court if they wanted to, but individuals would be given a choice in the matter and would not be denied their constitutional right to access the courts and have a jury trial
Jury trial
A jury trial is a legal proceeding in which a jury either makes a decision or makes findings of fact which are then applied by a judge...
. The bill is supported by the groups such as Public Citizen, Center for Responsible Lending, Consumer Federation of America, Homeowners of Texas, Homeowners Against Deficient Dwellings, Home Owners for Better Building, National Association of Consumer Advocates, National Consumer Law Center
National Consumer Law Center
The National Consumer Law Center is an American nonprofit organization specializing in consumer issues on behalf of low-income people. Legal services, government and private attorneys, as well as community organizations, work with the center to advocate for consumer reform.The National Consumer Law...
, National Consumer Coalition for Nursing Home Reform, National Employment Lawyers Association, and American Association for Justice. Opposition to the bill is led by the U.S. Chamber of Commerce's Institute for Legal Reform
Institute for Legal Reform
The US Chamber Institute for Legal Reform is an advocacy group founded in 1998 by the United States Chamber of Commerce, with a focus on what it calls "tort reform."- Stances on Issues :...
.
City of San Francisco lawsuit
In March 2008, the City of County of San Francisco filed a lawsuit against the National Arbitration Forum on behalf of its citizens, accusing the arbitrator of unfairly favoring credit card companies in disputes with their customers. Drawing upon research by Public Citizen and others and the City's own investigation, the suit alleges that in specific cases the NAF approved an inflated award, improperly imposed attorneys fees, and did not respond to consumer requests to appear at an arbitration. The lawsuit said that between January 2003 and March 2007 NAF heard 18,075 credit card cases, and ruled in favor of consumers on just 30 occasions.Businessweek's allegations of bias
In June 2008, Businessweek made broad claims of NAF's bias in favor of consumer creditors and hidden conflict of interest. According to the article, NAF markets itself to consumer credit providers, collection agencies and law firms.Ex-employee lawsuit
In April 2009 an ex-employee filed suit against NAF "for employment discrimination, deceptive trade practices and consumer fraud." The suit said that "During the course of plaintiff’s employment at defendants, she witnessed fraudulent and corrupt practices in the administration of arbitration cases."Minnesota Attorney General lawsuit
During the weekend of July 18, 2009 the National Arbitration Forum agreed to cease arbitrating credit card disputes, after being sued on July 14, 2009 by Minnesota Attorney General, Lori SwansonLori Swanson
Lori Swanson is the Attorney General of the US state of Minnesota. She was elected on November 7, 2006, and took office on January 2, 2007, succeeding Mike Hatch, who declined to run for re-election in order to run for governor...
. Dani Liblang a consumer lawyer based in Birmingham, MI said, “The National Arbitration Forum was in the pockets of the big banks. It would just rubber-stamp whatever the banks wanted in the credit disputes.”
The Minnesota Attorney General brought an enforcement action against NAF, alleging that it had “actively encouraged” credit card issuers to place mandatory arbitration clauses in their contracts naming the forum as the arbitrator. The suit also alleges that a group of hedge funds with ties to a large debt-collection agency called Axiant owns a stake in the forum through an entity created to hide the connection. Nearly 60 percent of the debt collection claims handled in 2006 by the National Arbitration Forum had been filed by an Axiant predecessor, according to the Attorney General.
The National Arbitration Forum "has extensive ties to the debt-collection industry," the Attorney General said at a press conference. "This is not an independent company and it needs to cease telling the public that it is."
"This is as big of a case as I've ever filed as attorney general," Swanson said. “These practices attack the foundation of our legal system.” The suit alleges violations of state consumer fraud, deceptive trade practices and false advertising laws.
The National Arbitration Forum defended its practices, saying that the arbitrators it contracts with are "independent," ensuring the "impartiality" of arbitration.
In response to the suit, NAF and the Minnesota Attorney General reached a settlement, in which The National Arbitration Forum agreed to stop accepting new credit card arbitration claims by 24 July 2009.
"Under the settlement, the National Arbitration Forum will, by the end of the week, stop accepting any new consumer arbitrations or in any manner participate in the processing or administering of new consumer arbitrations. The company will permanently stop administering arbitrations involving consumer debt, including credit cards, consumer loans, telecommunications, utilities, health care, and consumer leases."
See also
- ArbitrationArbitrationArbitration, a form of alternative dispute resolution , is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons , by whose decision they agree to be bound...
- American Arbitration AssociationAmerican Arbitration AssociationThe American Arbitration Association is a private enterprise in the business of arbitration, and one of several arbitration organizations that administers arbitration proceedings. The AAA also administers mediation and other forms of alternative dispute resolution. It is headquartered in New York...
- Arbitration in the United States
- Alternative dispute resolutionAlternative dispute resolutionAlternative Dispute Resolution includes dispute resolution processes and techniques that act as a means for disagreeing parties to come to an agreement short of litigation. ADR basically is an alternative to a formal court hearing or litigation...
- Dispute resolutionDispute resolutionDispute resolution is the process of resolving disputes between parties.-Methods:Methods of dispute resolution include:* lawsuits * arbitration* collaborative law* mediation* conciliation* many types of negotiation* facilitation...
- MediationMediationMediation, as used in law, is a form of alternative dispute resolution , a way of resolving disputes between two or more parties. A third party, the mediator, assists the parties to negotiate their own settlement...
- National Academy of ArbitratorsNational Academy of ArbitratorsThe National Academy of Arbitrators is a not-for-profit 501 honorary and professional organization of labor arbitrators in the United States and Canada founded in 1947....
External links
- Suit accuses credit card service firm; S.F. city attorney alleges bias for debt collectors in arbitration
- TLPJ Charges National Arbitration Forum with Violating CA Disclosure Law
- Neutrality Questions Continue to Dog Arbitration Firm
- National Arbitration Forum's Wall of Secrecy Crumbling
- Public Citizen Report, The Arbitration Trap: How Credit Card Companies Ensnare Consumers
- National Arbitration Forum Website
- California Consumer Arbitration Data
- National Arbitration Forum Press Release Claims That New Study Demonstrates That Arbitration Offers Benefits for Consumers
- PPT National Arbitration Forum: California Consumer Arbitration Data
- Dnattorney.com web site