Arbitration Exposed As Being Controlled By Big Business

Forced arbitration in consumer contracts has become a way of life in the United States. Almost all consumer contracts and purchase agreements contain clauses requiring a person that has been the victim of fraud, negligence, or intentional harmful conduct by a large company to give up their rights to a jury trial and submit to arbitration.
For many years consumer and lawyer groups have complained that these arbitration panels are stacked against consumers and serve as nothing more than “bought” protectors of large companies.
Recently, Minnesota Attorney General Lori Swanson sued the National Arbitration Forum (NAF) and reached a settlement that is a tremendous win for consumers.
For years, NAF has been the credit card industry’s go-to provider for credit card collection arbitrations. The Minnesota Attorney General’s lawsuit charged NAF with falsely claiming to be a neutral forum despite having corporate ties to large debt collection firms, treating major U.S. corporations as its clients and secretly collaborating with the U.S. Chamber of Commerce to try to discredit reports on its bias, such as a Public Citizen’s 2007 report showing that big corporations win 95 percent of the time before NAF.
The problem is much bigger than NAF alone. The Minnesota lawsuit also forced the American Arbitration Association (AAA), to anounce it was suspending these arbitrations.
Federal legislation has been introduced to ensure that these events are not repeated and that another arbitration company does not step into the void left by NAF. The Arbitration Fairness Act (H.R. 1020 and S. 931) would do just that. In addition, the Consumer Financial Protection Agency Act (H.R. 3126) would create an agency empowered to protect consumers from forced arbitration in contracts for financial products such as credit cards.
These bills which ensure fairness to all have been and will continue to be opposed by the U.S. Chamber of Commerce and its big business constituents. We urge everyone to call, email, or write their Senators and Representatives in Congress to support passage of these bills.