Credit Card Mandatory Arbitration May Soon Be Obsolete
Mandatory arbitration, one of the credit card industries’ dirties tricks, may soon be a thing of the past. Mandatory arbitration has been a wide-spread practice among credit card companies that forces the consumer to address any dispute in a pre-selected arbitration forum. These arbitration forums act as private judges pre-selected by the credit card company.
How fair can that be? Well, recently the Minnesota Attorney General filed a lawsuit against National Arbitration Forum of Minnesota accusing it of unfair and biased practices against consumers. A 2007 study found that consumers lost 94 percent of the cases filed by MBNA (now owned by Bank of America) and arbitrated by the National Arbitration Forum. After the Minnesota lawsuit was filed, the National Arbitration Forum announced that it would not accept new cases from many “clients,” including credit card companies.
The handwriting is on the wall. Bank of America, Chase, and even the notorious Capital One Bank have stated that they will eliminate the arbitration requirement from future credit card agreements and will not enforce the provision in existing contracts. Congress has indicated its commitment to protect consumers by passing the Credit CARD Act of 2009, and the current trend is to create a federal consumer financial protection agency that would have the power to eliminate such unfair practices. Currently there are two bills pending in Congress that would address mandatory arbitration forced upon consumers by the unfair contracts.
Credit card companies are not your friends! If you are overwhelmed by credit card debt and struggle to make minimum payments each month, consult with an experienced bankruptcy attorney and consider your options. A bankruptcy attorney can eliminate credit card debt through the power of the federal law.