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)


Edit Your Comment

  1. Graedus says:


  2. Maurs says:

    It kind of makes you wonder what sort of the things were done by the corporations who actually did lose.

  3. Namilia says:

    @Maurs: They didn’t pay the arbitrator enough under the table.

  4. chartrule says:

    that’s ugly !

    they need to remove the privately funded part

  5. chartrule says:

    from the arbitration that is

  6. Crazytree says:

    hard to say if 95% of all consumer cases in front of arbitrators are shitty.

  7. dabu says:

    Hmm, this seems like a skewed sample set. If I’m reading it correctly, 99.6% of the cases are brought to arbitration BY the companies. I would imagine that the party BRINGING the case would have a better legal standing.

  8. doctor_cos wants you to remain calm says:

    There are no surprises in this article.
    Mandatory binding arbitration is used by credit card companies and many other large companies that have to ‘deal’ with consumers to avoid the legal system where the consumer might actually have a fair shake.
    The firms actually doing the arbitration have a thinly veiled interest in finding on the side of the companies, or they might not get the nod in the next case.
    The cases are often ruled upon solely on the basis of documents and information provided by the company with no notice or regard given to the consumer.
    If the consumer requests a formal hearing, they must pay for it.

    This kind of thing is only legal because of the pro-business interests and lobbies making sure that this kind of anti-consumer mentality is prevalent in congress, as who the hell are consumers and the public to know what’s best for them anyway.

    This is the same reason they are not required to tell you how long it would take to pay off your cards if you make the ‘minimum’ payment.

  9. doctor_cos wants you to remain calm says:

    @dabu: Not true. One could make the assumption that since the companies choose who does the arbitration, they are going to pick a firm who has been shall we say generous in the past.
    And as I stated before, the firms’ interest would be to make the companies happy. After all, Citibank will bring them more business than you or I would.

  10. Xkeeper says:

    I don’t think that the arbitration rate for companies being so high is strange — more than likely they’ll open the case for you, since they know that a) you’re not getting a chance to show anything without forking out moneymoneymoney, and b) it’s not like you’ll win anyway.

    Although I will say, the statistics on this are absolutely disgusting.

  11. humorbot says:

    *feigns astonishment*

    What? You mean these extra-judicial civil kangaroo courts aren’t looking out for the little guy? And you say that Congress has cheerfully ignored this abusive practice for years? Double what?!

    See doctor_cos for details.

  12. Mr. Gunn says:

    Thanks for the raw data, Ben! Much appreciated.

  13. says:

    i love the creepy look of the guy in the background to the right. lolz.

  14. dabu says:

    @doctor_cos: Gotcha. Yeah, that makes more sense. I’m assuming both parties have to agree on an arbitrator, but businesses being seasoned in this sort of thing, probably choose arbitrators that always favor them. Of course a consumer wouldn’t know squat.

  15. goodguy812 says:

    no i think that 95% of all consumers are just wrong. i mean those big corporations wouldn’t do anything dirty to consumers. i think everything should be done by an arbitrator.

  16. goodguy812 says:

    ok hopefully you sense a overpowering feel of sarcasm from my last post.
    how could anyone work for these companies? i would shoot myself! unless one of the 95% of consumers who lost did it first. lets find this place and burn it down!, i mean have a peaceful demonstration.

  17. goodguy812 says:

    WWJA—–who would jesus arbitrate.

  18. goodguy812 says:

    hows this for my new bumper sticker idea:

    masturbation-not arbitration. or

    only a hatian would go to arbitration! okay so i’m not really a funny kind of guy. but hows this for a real one


  19. goodguy812 says:

    if 95% of all consmers are “wrong” and its all suposedly fair, then why do they even have arbitration? it seems to me if your winning that many cases, why not let them go to court. i think the corporations know they would lose more than 5% in the legal system. not too mention they cases would all make the news and the corps. would actually have to be held accountable at least by the consumers.

  20. zippyglue says:

    Hmmmm… Seems like these Arbitration firms are prime for a class action lawsuit. The class would be the 95% of consumers who have been screwed over by these business funded firms. Funny since we’ve been reading on Consumerist that some of the big guys (Verizon is one I believe) have been hit by State Attorney Generals for trying to use their arbitration clauses to avoid class action. Even more ironic is that the evidence would include the cases that were never tried in a real court!