Lawsuit filed against largest credit card arbitration company - Bills.com News

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Lawsuit filed against largest credit card arbitration company

Friday, Jul 17, 2009

The nation's largest credit card debt arbitration firm has become the focus of a lawsuit filed by the Minnesota attorney general.

The suit alleges that the National Arbitration Forum (NAF) worked with credit card companies to get arbitration clauses put into credit card agreements and to make itself the arbiter of disputes between cardholders and credit card companies.

"The company tells consumers, the public, courts, and the government that it is independentand operates like an impartial court system," Attorney General Lori Swanson said. "In fact, it has extensive ties to the collection industry - ties that it hides from the public."

Arbitration clauses appear in many credit card agreements and take the cardholder's right to settle disputes out of the courtroom
and into the hands of a third party. Often times the third party is chosen by the credit card company.

The suit also alleges that NAF had ties to collections agencies. Accretive, a family of private equity funds, created several equity funds that invested $42 million in the NAF. Then, Accretive gained
a majority interest in Axiant, which is a debt-collection agency. Axiant had gained the collections operations of Mann Bracken, a large law firm.

The suit covers a number of laws in Minnesota, including statutes against consumer fraud, false advertising and deceptive trade practices.


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