Turmoil in Arbitration Empire Upends Credit-Card Disputes

Wall Street Journal
October 14, 2009
Mollenkamp, Carrick; Searcey, Dionne; Koppel, Nathan
P. A1

J. Michael Cline of the private-equity firm Accretive LLC has come under fire in recent months, having obtained a stake in the National Arbitration Forum (NAF) -- which handles credit-card arbitration proceedings for banks -- and launched Axiant LLC to collect consumer debt after NAF completes arbitrations. NAF is facing lawsuits for deceptive advertising, as consumers were unaware of its ties to Axiant. Now, NAF and the American Arbitration Association have stopped handling credit-card arbitration cases, with Congress investigating the fairness of mandatory arbitration. Experts note that banks increasingly are dropping mandatory arbitration clauses, making it possible for consumers to take disputes to court. While experts see a significant shift in the handling of consumer-debt disputes, they note that the system will not be overhauled unless Congress determines that laws restricting the use of arbitration are necessary.

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