In a suit filed against the National Arbitration Forum, Minnesota Attorney General Lori Swanson, exposes the inner workings and bias of the nation’s largest forced arbitration firm.
According to the complaint, the NAF, despite claiming its impartiality, works against consumers by convincing major credit card companies and other creditors to insert forced arbitration clauses into customer agreements. These clauses generate revenue for the NAF by explicitly requiring it to decide the disputes. According to USA Today (7/15), “the dispute-resolution company engaged in ‘deceptive practices’ in hiding its ties to the debt-collection and banking industry.” These same debt-collection firms often appear as parties in NAF forced arbitration proceedings; ultimately, this creates a two-against-one lopsided hearing against consumers.
Mandatory binding arbitration clauses are hidden in the fine print of everyday contracts from credit card billing interests, employment contracts, to nursing home agreements, and force consumers to unknowingly sign away their legal rights if a dispute arises. Instead, any dispute must be decided in arbitration by an arbitrator that is usually chosen by the corporation. The Arbitration Fairness Act and the Fairness in Nursing Home Arbitration Act have been introduced in Congress to stem this predatory practice.
The attorney general details how the NAF—out of the public eye—worked hand-in-hand with the U.S. Chamber of Commerce to undermine reports that question the integrity of the forum’s practices and attack the bills currently pending in Congress. That report by Public Citizen found that of more than 19,000 cases in which a National Arbitration Forum-appointed arbitrator was involved, the business won 94 percent of the time. In fact, 90 percent of the NAF cases were handled by just 28 arbitrators, who awarded businesses $185 million.