Legal News

In Settlement, Arbitration Company Agrees To Largely Step Aside

By Chris Herring

Last week, Minnesota’s attorney general said she was suing a company that resolves disputes between credit card companies and their customers. She claimed that the Minnesota-based National Arbitration Forum unfairly favored the credit card companies in the cases it handled. (Click here to read last week’s LB post on the news)

So now, put yourself in the shoes of a credit card customer who has a dispute with your credit card company. After hearing that the state’s attorney general has raised questions about the group that’s determining your pocketbook’s fate, you might feel a bit disadvantaged in your duel with the credit card company.

A settlement between the Minnesota attorney general’s office and the NAF this weekend, though, makes the hypothetical example a moot one. In the agreement, announced yesterday by Minnesota AG Lori Swanson (pictured right), the NAF will no longer be allowed to settle disputes between consumers and credit card companies. The settlement takes effect Friday. Click here to read the Associated Press story on the settlement.

Swanson hailed the agreement, saying it guaranteed that “the company is out of this business.” Still, the NAF denies the accusations, saying instead that it voluntarily settled because of mounting legal costs. “Notably, nothing in the Minnesota Attorney General's complaint alleges that arbitration proceedings administered by the FORUM are unfair,” the company’s statement reads. Click here for the rest of the NAF’s press release.

In the complaint, 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.

BusinessWeek, who raised questions of bias about NAF in a story last year, said the settlement leaves the company incredibly handicapped. “The only business NAF can now be involved with is in arbitrating Internet domain disputes, a business it has long been in,” the story writes. Click here to read it. Additionally, the Law Blog has chronicled a number of allegations made against the NAF in the past year or so. Click here, here, here, here and here to read them.

Full post as published by Law Blog - WSJ.com on July 20, 2009 (boomark / email).