Legal News

Minnesota AG Files Suit Against Leading Arbitration Firm

By Chris Herring

The National Arbitration Forum, a firm that helps resolve disputes between credit card companies and their customers, has been criticized for having a bias in favor of the credit card issuers.

Now this allegation comes in the form of a lawsuit. Accusing the Minnesota-based company of concealing its ties to credit card companies and other debt collection agencies, Minnesota Attorney General Lori Swanson said the NAF “is not an independent company. It needs to stop deceiving the public by saying it is.” Click here to read the story from the Minneapolis Star Tribune and here for the USA Today story. A copy of the lawsuit can be found here.

Specifically, the suit charges the NAF — one of the credit card industry’s largest arbitrators — with consumer fraud, deceptive trade practices and false advertisement.

The company denied the accusations. “The Forum vigorously disagrees with any allegations of bias or in the lawsuit and will defend against them,” said spokeswoman Christina Doucet. “Beyond that, our legal team is reviewing the complaint and defining next steps.”

At a press conference yesterday, Swanson said that 60% of the 200,000-plus collection claims handled by NAF in 2006 were filed by law firms with ties to the collection industry. In an effort to show NAF’s ties to collection agencies, she presented a diagram illustrating the company’s web of financial relationships. Swanson argued that NAF couldn’t possibly be an independent firm, as it owns companies with large stakes in the debt collection industry. For previous Law Blog coverage about the NAF click here, here, here, here and here.

Full post as published by Law Blog - WSJ.com on July 15, 2009 (boomark / email).