Legal News

BizWeek: Leading Arbitration Firm Favors Creditors Over Individuals

By Nathan Koppel

In its cover story this week, BusinessWeek offers up a lengthy critique of the National Arbitration Forum, one of the nation’s largest arbitration firms. The story focuses on credit-card collection arbitrations, citing internal NAF documents, case results, and interviews with NAF arbitrators for the proposition that NAF “operates a system in which it is exceedingly difficult for individuals to prevail.”

In a 2007 marketing presentation to a prospective customer, NAF reportedly explained that creditors can use procedural maneuvers, such as stays and dismissals, to tilt arbitration in their favor. BizWeek also reports that summaries of weekly NAF business meetings from 2004 and 2005 indicate that NAF enlisted law firms with ties to credit-card companies to help NAF win business from creditors ─ a move that calls into question’s NAF’s neutrality, according to a professor quoted in the piece. (Click here for a recent WSJ article profiling NAF.)

In response, NAF told the magazine that consumers often prevail in its arbitrations and that its process “satisfies or exceeds objective standards of fairness.” It also said that it legitimately markets its services and that its procedures are flexible and equally favor claimants and respondents.

Separately, the Daily Journal today reports that a California woman won an NAF debt arbitration against Chase Bank ─ a victory notable for its rarity, the DJ says. (Link unavailable)

NAF is not new to controversy. As noted in this WSJ piece, the San Francisco city attorney has sued NAF, accusing it of “churning out arbitration awards in favor of debt collectors.” NAF told WSJ that courts had uniformly supported its arbitration program.

Photo: iStockPhoto

Full post as published by Law Blog - WSJ.com on June 10, 2008 (boomark / email).