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Facts Reveled in National Arbitration Forum Lawsuit Should Make You Want to Puke

The state of Minnesota recently filed a lawsuit against the National Arbitration Forum, the entity that claims to independently resolve consumer issues with creditors through binding arbitration.

We’ve known for year this is a well controlled scheme in which the outcome is all but certain when a case goes to arbitration, the consumer will lose.

In the lawsuit, download a copy here, it is made clear that the arbitration clauses are not only not designed to be at arms length, fair or impartial, but they are actually promoted as an effective collection tool to be used by creditors against consumers. If you have an hour of free time I suggest that you read the lawsuit and educate yourself about how secretive and perverse that arbitration has become as a collection tool rather than a fair and impartial process to resolve complaints.

The National Arbitration Forum’s solicitations to corporations often characterize the Forum’s arbitration services as a collections tool:

  • “[M]any credit card issuers are using arbitration as a collection tool for both pre-charge off and post-charge off debt.” (E-mail to bank.)
  • “The Arbitration Alternative: Using FORUM Arbitration in Collections.” (PowerPoint presentation to bank.)
  • “How is arbitration currently used as a part of the collections cycle?” (PowerPoint presentation to bank.)
  • “How can arbitration benefit the collections?” (PowerPoint presentation to bank.)
  • “Using Arbitration for Collections & Recovery – Why It’s Effective.” (PowerPoint presentation to retail financing company.)

The National Arbitration Forum’s solicitations also claim that the Forum’s arbitration services provide an efficient and less costly way to collect debts:

  • “With filing fees starting at $25, FORUM arbitration can be a quicker, more cost effective way to resolve collection disputes than traditional litigation.” (E-mail to bank.)
  • “Finally, as I’m sure you are aware, more and more of the largest card issuers are using arbitration as an efficient, cost-effective tool to resolve disputes, including collection disputes.” (E-mail to bank.)
  • “[Benefits of arbitration include a] marked increase in recovery rates over existing collection efforts.” (PowerPoint presentation to bank.)
  • “Arbitration can save up to 66% of your collection costs. Arbitration can save your money and your time collecting delinquent accounts. Sixty-six percent, according to Corporate Cashflow. Saving the money you’ve been spending on court costs, attorney fees, and discovery.” (Advertisement.)


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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Kristy Welsh

    Some consumers are now using the arbitration clauses in their credit card contracts to fight AGAINST debt collectors and credit card companies, some with great successes.

    Here is the forum where these techniques are discussed in depth:

    Interesting turn of events, eh?

    • Steve Rhode


      Well that made for some very interesting reading. Thanks for the heads up.


  • afforydioca

    I am wonder if I can get my credit score my self and repair it

    Please let me know if you have the free Credit Report & Repair Kit.

    Thanks and Best Regards,

  • Tim King

    I was a little disappointed in the court filing. You said it’s “a well controlled scheme in which the outcome is all but certain when a case goes to arbitration, the consumer will lose.” And I was hoping the plaintiff would have alleged specific examples of this happening. But as it turns out they only point out numerous conflicts of interest. (Unless I missed something significant. If so, please point it out to me.)

    That’s bad, yes. But I began reading the complaint wondering why some lawyer had not filed a class-action lawsuit on behalf of actual consumers who had been defrauded (rather than the Minnesota state government suing—that sounded fishy to me to start with). And now, I’m wondering if maybe the absence of an actual class-action might be because, while there are a number of dangerous connections that could potentially overhead, no actual smoke has been observed.

    What have I missed?

    .-= Tim King´s last blog ..My Happily Ever After =-.

    • Steve Rhode


      The class action is coming, I’m sure. The MN case will probably create a tremendous amount of discovered facts that will aid any class action efforts.

      Hey, look how long it has taken to get cases against tobacco companies for knowingly killing people. How many class action suits have we seen against tobacco companies? NAF has made tough and conscious efforts to limit the public information or truth to date.

      I’m just curious, if MN can prove that the companies did what MN claims then do you think every consumer that has been through arbitration could then be an easily identified member of a future class action suit? What do you think?


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