There are few of us who are not party to some kind of fine-print contract for the various services we all use on a daily basis. From credit cards, to bank accounts, to vehicle purchases, we all engage in contracts we don’t read. And the fact is, the companies know you don’t read those contracts, and the government doesn’t care.
Contained in many of these contracts are “arbitration clauses” in which the consumer gives up their rights to have their day in court in order to go forward with their case before a private arbitrator (often a retired judge). A lawsuit was filed several years ago, which has plodded through the courts on this very issue.
This lawsuit (called Ross, et al. v. Bank of America, N.A., (USA), No. 05-cv-7116 (S.D.N.Y.)) claims that the settling defendants Bank of America, Capital One, Chase and HSBC and the non-settling defendants Discover, Citibank and National Arbitration Forum violated federal law by conspiring, with each other and certain non-defendants, to require that their cardholders (a) take all legal disputes to arbitration rather than court and (b) give up any right to participate in class actions against these credit card companies.
Why would they do such a thing? Because consumer arbitration, quite predictably, has been unfairly stacked against consumers for some time.
In March 2008, the City of County of San Francisco filed a lawsuit against the National Arbitration Forum on behalf of its citizens, accusing the arbitrator of unfairly favoring credit card companies in disputes with their customers. Drawing upon research by Public Citizen and others and the City’s own investigation, the suit alleges that in specific cases the NAF approved an inflated award, improperly imposed attorneys fees, and did not respond to consumer requests to appear at an arbitration. The lawsuit said that between January 2003 and March 2007 NAF heard 18,075 credit card cases, and ruled in favor of consumers on just 30 occasions.