A Win For Consumers – National Arbitration Forum Exits Business!

(9 am. – promoted by ek hornbeck)

If you have a cell phone or a credit card (and who among us does not in this brave new world?) then you are party to an agreement to arbitrate any dispute between you and your carrier or card issuer. Did you know that? Many of you reading this will have some awareness of this fact, but do your really know what it means? Basically what it means is you have given up your right to go to court against these companies if you have a dispute. The most common dispute is about billing or debts, but this clause covers all disputes. By signing a contract with these companies you have signed away your right to trial.

“Originally posted at Squarestate.net“

Now, arbitration, as a concept is not really a bad thing. The idea is two parties who have some kind of dispute agree on a third party who will hear their points of view and decide what is fair. It is binding on both parties and has less cost and time involved than a traditional court proceeding. In nearly all cases the arbitrator is an attorney or a former judge. But here is the rub, once the arbitrator decides that is it, you are bound by the decision. Another issue with arbitration is both parties have to pay for it, it is not a service provided by the State, so someone has to pay the piper.

The real problem here is you are bound by what is called mandatory arbitration. You have no choice anymore as you have signed a contract with the company that states you will go to mandatory binding arbitration rather than the courts if you have a dispute. You have already signed these rights away if you have a contract with a credit card company or a cell phone provider.

Now, the Dog is going to really make you upset. Today the National Arbitration Forum is exiting the consumer arbitration business as part of a settlement with the Attorney General of Wisconsin, where they are based. NAF is the largest arbitration firm in the United States handling over 50,000 arbitration cases a month. They are closely held for profit business and this is where the real trouble begins.

First of all the debt holders win against the consumers 94% of the time in NAF arbitration. The next thing you need to know is 40% of NAF is owned by a hedge fund that also owns debt collection agencies, which often bring cases before the board. Let that sink in a little bit. The NAF had a financial interest in return business and it was in part owned by the very people employing it as a supposed fair arbiter. Combine that with the 94% win ratio for the debt collectors and you can see why the Wisconsin AG brought suit.  

The Dog is always willing to give a benefit of the doubt, but the fact mere days after a case was filed against the company charging it was biased in its decisions, the company agreed to give up its primary source of income, consumer arbitration forever. That looks very much like a enterprise that knew if it found itself in court it would be exposed a total shame and forced into massive liability. After all, if you are doing things correctly and making a ton of money, would you willing give that up?

All of this leads us back to the issue of mandatory binding arbitration on any kind of contract. If we can not trust the arbiters, then this is just one more case where the powerful have used there power to stick it to the less powerful. There is a reason we have the system of Law and government we do. The Framers had one primary goal in mind when they created the structure of the United States; to have a method by which the powerful were balanced in their ability to affect the individual who had less power. All laws, all regulations, all statutes are at their core, to one degree or another, an attempt at this balance.

The system is out of balance in many places, but this signing away of rights by means of fine print, combined with a system of arbitration which increasingly appears to be less and less the neutral disinterested party it is supposed to be is an egregious example of this. Currently Rep. Waxman (Superman, CA) is looking at ways to reign in these rouge actors. To the Dogs point of view it could not happen soon enough.

There is such a thing as unrestrained capitalism. We have been moving closer and closer to this state of affairs for the last twenty years. The problem is capitalism unrestrained is an anathema to the ideals of the Founders, who knew, on a personal level as subjects of a King, what is was to be nearly powerless in the face of a massive disparity of justice. It is what lead them ultimately to rebel and found a new nation. There is no room in a democracy for unrestrained capitalism, there must, as with all things, be a balance. That balance is best found in our courts, not a basically unregulated for profit pseudo justice system.  

The floor is yours.