Did anyone get a fair deal?

That's what consumers who used one of these companies in a debt collection arbitration setting want to know – and to read the Minnesota Attorney General's complaint, the answer seems to be NO. The lawsuit claims that NAF and the debt collection law firm, Mann Bracken, have all been owned by the same New York hedge fund since 2007 and that these relationships were concealed from the public.

It also alleges that the NAF encouraged creditors to file arbitration claims, helped creditors draft arbitration clauses and sometimes collection claims against consumers, and referred creditors to debt collection law firms, including Mann Bracken, which then filed arbitration claims before the NAF.

CA Debt Collection Attorney says NAF was rubber stamping cases

California Debt Collection Attorney Steve Recordon, says that according to a 2007 study on NAF's practices showed that in one day, an NAF arbitrator ruled on 40 cases – all for the full amount that the credit card company sought. All were Chase Manhattan Bank. So, they're obviously just rubber stamping these in the credit card company's favor. He told us:

Credit card companies pay the arbitration company's fees, so the likelihood of abusive practices is high. Collection attorneys have known about NAF's practices for a long time. However, now more people are paying attention because it's happening to everyone. Plus, once state Attorney Generals get involved, it gets serious.

What can you do?

Debtor's right attorneys are still trying to figure out what legal remedies might be available to consumers who didn't get a fair deal – and since the NAF arbitrated approximately 200,000 per year – that adds up to a lot of people. Recordon told us that, “The NAF isn't admitting that they've done anything wrong, so the burden of proof is likely on the consumer. While consumers have a good argument against the filing and that the awards are fraudulent, if the credit card company has already domesticated the judgment in order to attach wages, then that complicates matters.”