Credit Card Disputes Tossed Into Disarray

Wall Street Journal 
July 22, 2009
Sidel, Robin; Sharma, Amol

The credit card industry could be hit hard by recent developments involving consumer-debt-collection disputes. In response to a lawsuit by the Minnesota attorney general for alleged violations of laws dealing with consumer fraud, deceptive trade practices, and false advertising tied to a failure to disclose financial ties to the debt-collection industry, the National Arbitration Forum will no longer accept new consumer-debt cases beginning July 24. Additionally, the American Arbitration Association announced that it will not handle such disputes until new guidelines or standards are issued. Atlanta attorney Chris Daniel of Paul, Hastings, Janofsky & Walker LLP says banks that issue credit cards face "significant operational and logistical issues" as a result of these announcements. While credit card companies favor arbitration because it is cost-effective and less time-consuming, consumer advocates insist that companies are favored in arbitration and that consumers typically do not understand that signing contracts requiring arbitration waives their rights to sue.
 

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