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.
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Big Arbitration Firm Pulls Out of Credit Card Business
Posted by: Dan Beucke on July 19By 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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4 responses so far ↓
1 Mpls Atty // Jul 20, 2009 at 1:18 pm
Unfortunately, this is an attorney general that has been slammed (and hard) for busting a union in her office. The Minnesota Legislative Auditor confirmed last year that she had ordered attorneys to falsify affidavits, file meritless lawsuits for good press, etc. She’s a bad apple, and while I’m no fan of NAF, I think it’s unfortunate that progressives are willing to turn a blind eye to the awful things that Lori Swanson has done in her office just because we dislike NAF. NAF is terrible, but Lori Swanson has shown that her tactics aren’t any better.
2 National Arbitration Forum Settles with Minnesota’s Attorney General « Disputing // Jul 20, 2009 at 4:10 pm
[...] follow up on our post of last week and as reported by the ADR Prof Blog and Professor Ross Runkel’s Law Memo Arbitration Blog, the National Arbitration Forum [...]
3 Joe // Jul 21, 2009 at 9:37 am
I guess they got caught red-handed.
4 ADR Law & Policy Update – Where Have You Gone? // Sep 10, 2009 at 3:05 pm
[...] I’m guessing that the Update is a casualty of the NAF’s difficult summer (see here and here among other places), and that’s a shame. The Update was a true service to the ADR community, [...]
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