Mandatory Binding Arbitration Still Sucks

81% Of Americans Hate Mandatory Binding Arbitration

Arbitration Mill Sued By San Francisco

A San Francisco attorney has sued the National Arbitration Forum for being biased towards credit companies and ignoring consumer rights.

In 2004, the suit alleges, California resident Elizabeth Marcotte was hit with a $25,0000 award, plus $10,000 in attorneys' fees, in a credit-card collection case. But Ms. Marcotte allegedly wasn't notified about the arbitration, because she was served at an old address, even though she had notified the credit-card company of her new address. The NAF awarded the attorneys' fees without requiring proof that the debt collector actually incurred the fees, according to the suit. Ms. Marcotte wasn't reached for comment.

In another credit-card collection case, the NAF allegedly entered an award against California resident John Sheakley, without responding to his request to appear at a hearing and explain why he didn't owe the purported debt to a bank that was a predecessor of FIA Card Services.

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Join us at 9:30 as we liveblog the Arbitration Fairness Act's second hearing before Congress. Arbitration is an extrajudicial jury-free way to resolve disputes where decisions are handed down by arbitrators who rule against consumers in 98.4% of cases. The Senate Judiciary Subcommittee on the Constitution will be considering S. 1782, an Act to banish mandatory binding arbitration from consumer disputes.

An October hearing on companion legislation in the House Judiciary Committee quickly devolved into a sob story, with three consumers sharing in horrifying detail how arbitration left them financially ruined. Today's hearing will be comparatively sedate, featuring one panel of academics and lawyers.

Join us at 9:30 as the professionals slice and dice the wonderful and evil qualities of the most anti-consumer practice allowed by law—for now.
(Photo: xsparrowx)
9:32: Video Link - Constitution Subcommittee hearing to examine S. 1782, to amend Chapter 1 of Title 9 of the United States Code with respect to arbitration. Coverage begins momentarily. Oh Congress, you could de-sass anything.
9:34: Here we go. Senator Feingold (D-WI) is chairing the hearing, already decrying our lost right to jury trials.

Consumers may finally escape from the clutches of mandatory binding arbitration if the House Judiciary Committee smiles favorably today upon the Arbitration Fairness Act. Arbitrators rule against consumers in more than 98% of all disputes; the Subcommittee on Commercial and Administrative Law is currently meeting to consider H.R. 3010, which would restore consumers' rights to resolve disputes fairly and openly.

Today's hearing will feature two panels. Four separate law firms will testify, along with the American Arbitration Association and Public Citizen. Join us as we struggle to interpret the Committee's legalese - which may prove just as futile as binding arbitration.
(Photo: xsparrowx)

2:00: Video Link
2:05: Today's commentary is brought to you by both Carey and Meghann in the hope that two pairs of ears will be able to decipher the Committee's legalese.
2:41: FINALLY! The hearing has been called to order.

Arbitration Firms Are Godless Bloodsuckers

In 2006, Richard Neely, a retired chief justice of the West Virginia Supreme Court, penned an article for The West Virginia Lawyer entitled, "Arbitration and the Godless Bloodsuckers." The National Arbitration Forum asked him to be an arbitrator one time and Neely described his experience:

"[T]he bank asks for substantial costs related to the arbitration itself, and those costs are significantly higher than court filing fees. . . . In one case that I handled, the fees alone amounted to $450. Furthermore, the arbitration company sends the arbitrator a judgment form already filled out so that all the arbitrator need do is check the appropriate box... In my case I did not award the bank the litigation-related fees. . . . I never got another case!"

Full article inside...

Arbitration Firm Rules Against Consumers 95% Of The Time

A popular arbitration firm, the National Arbitration Forum, only finds in favor of consumers 5% of the time, a new study released today by advocacy group Public Citizen reports.

The 8-month analysis of 34,000 cases decided by the National Arbitration Forum over a four year period found:

• 188 of the cases were brought before NAF by consumers, 99.6% by corporations
• On one arbitrator's busiest day, assuming an eight-hour workday, he decided a case once every seven minutes. 100% of those were in favor of the business, awarding 100% of the request money.
• 28 NAF arbitrators handled about 9 out of 10 of the cases, ruling for business 95% of the time.
• 120 other arbitrators handled 10% of the cases, ruling for businesses 86% of the time.

"Binding mandatory arbitration is a systematic, privately funded denial of justice for consumers," said Laura MacCleery, director of Public Citizen's Congress Watch division. "It is a get-out-of-jail-free card for corporate hucksters."

The Arbitration Trap: How Credit Card Companies Ensnare Consumers (PDF) [Public Citizen]
Raw data (XLS)
(Photo: Getty)

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MBNA Refuses To Appear For Binding Arbitration, May Still Prevail

A glimmer of hope has opened up for consumers concerned about entire industries systemic and wholesale stripping of their right to resolve disputes by trial rather than by arbitration firms whose fancypants are bought and paid for by the corporations they're umpiring. This ray is The Arbitration Fairness Act, and as introduced in the Senate by Feingold, Russell D. [WI], the part the bill that applies to you says:

No predispute arbitration agreement shall be valid or enforceable if it requires arbitration of...a consumer dispute.