Credit card arbitration process turned upside down

Credit card companies have long required card holders to settle disputes through arbitration. While many consumers don't realize that arbitration is generally required because it is buried in the tiny boilerplate language that comes with the card itself, that requirement has generally been enforced. Until now. Bank of America, the nation's largest bank, recently announced that it will no longer require customers to arbitrate claims – which may turn the credit card arbitration process upside down.

The announcement comes only weeks after the NAF settled a corruption case with the Minnesota Attorney General's office which alleged that the NAF engaged in consumer fraud, deceptive trade practices, false advertising and that the NAF and debt collection law firm, Mann Bracken, have all been owned by the same New York hedge fund since 2007, but that information had been concealed from the public.

The NAF settled the case only five days after being sued and, coincidentally, the American Arbitration Association pulled out of the same market only days later. Other banks such as American Express, JP Morgan, Citigroup, Capital One and Discover may follow suit – although right now they all seem to be analyzing and monitoring the situation.

Were consumers bilked?

The NAF estimated that nearly 95% of its credit card arbitration cases were decided in favor of lenders and studies have been conducted showing that arbitrators basically “rubber stamped” many of these cases without being impartial – which is at the very heart of what an arbitrator should do. Consumers now wonder if they were bilked out of money they may have not owed.

As a result, several lawsuits have been filed against credit card, arbitration and debt collection companies. If you believe that your credit card arbitration may not have been entirely fair, contact a debtors right attorney to discuss your situation and evaluate your options.