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Arbitration Firms Quit Consumer Debt Biz
Credit card, cell phone companies scramble to collect by themselves
By Rob Quinn
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Posted Jul 22, 09 8:33 AM CDT
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(Newser)
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Credit card and cell phone companies are scrambling as two major arbitration firms back out of the business of settling consumer disputes, the Wall Street Journal reports. The National Arbitration Forum—accused in a Minnesota lawsuit of misleading consumers into thinking it was impartial—will stop taking cases this week, and the American Arbitration Association says it will follow suit until new guidelines are established.
Consumer-protection advocates have long criticized the process, arguing that it favors companies, and that many consumers often don’t realize they’re relinquishing the right to go to court when they sign contracts with arbitration clauses. Credit card and cell phone companies—which usually require customers to agree to mandatory and binding arbitration—are now expected to face major headaches as the process of collecting unpaid debts is disrupted.