Business Week reported yesterday that NAF will no longer do consumer card arbitration, and if I’m reading the article correctly, will no longer do any of a range of other consumer arbitrations. A settlement of the Minnesota Attorney General’s claim against NAF, this could shake up arbitration from a provider side, just as Congress has been looking to shake it up legislatively. I have no information about what, if any, impact this may have on the AAA’s presence in the field.
Text of a part of the article on Business Week’s website appears below.
Thank you to Jean Sternlight for the tip late yesterday.
Big Arbitration Firm Pulls Out of Credit Card Business
Posted by: Dan Beucke on July 19
By Robert Berner
After coming under increasing fire for bias towards major credit-card companies, the nation’s largest arbitration firm involved in adjudicating delinquent credit-card debt has agreed to pull out of the business, Minnesota Attorney General Lori Swanson disclosed on Sunday, July 19.
The settlement with the National Arbitration Forum comes after the Minnesota AG sued the firm on July 14 for consumer fraud, deceptive trade practices, and false advertising. The civil suit, filed in state district court in Minneapolis, alleged conflicting ties between the NAF and debt-collection law firms that represented major credit-card companies. The suit also alleged that New York hedge fund Accretive LLC owned stakes in such collection law firms and the NAF, sending arbitration business between the two.
Under the terms of the consent decree, dated July 17 and signed by the AG and NAF officials, the arbitration firm by the end of this week will stop accepting new consumer arbitrations of any sort. These include arbitrations over disputed credit-card debt as well as new lines of business the NAF has moved into, such as arbitrating consumer debts in healthcare, telecommunications, utilities, mortgages, and consumer leases. The only business NAF can now be involved with is in arbitrating Internet domain disputes, a business it has long been in.
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