July 16, 2009
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WASHINGTON, DC –- The National Consumers League (NCL) commends Minnesota Attorney General Lori Swanson for her efforts to prosecute the National Arbitration Forum (NAF), the nation’s largest arbitration company, for consumer fraud, deceptive trade practices, and false advertising.
Consumer groups have argued for years that the while the NAF claims to be a neutral arbitrator of debt collection complaints against consumers and on other consumer complaints, behind the scenes the company aggressively markets itself to credit card companies, mortgage lenders, debt buyers, and cell phone companies and even helps them put mandatory arbitration clauses in consumer contracts.
Businesses know that they will be treated more favorable under arbitration, and so have been eager to participate in it.
But the suit brought by the Attorney General brings up even more serious allegations of bias and favoritism toward businesses. Swanson claims the NAF helps companies fill out claims against consumers, while providing consumers no such assistance. The lawsuit also reveals the intricate corporate ties between NAF and debt collection companies who do business with NAF’s clients. The NAF hides these connections, as they illustrate a clear conflict of interest.
Mandatory arbitration provides legal cover for businesses at the expense of consumers’ right to take action in court when they are harmed. The National Consumers League supports a full ban on mandatory arbitration and applauds the Minnesota Attorney General for her action on the matter.