For several years, Credit Cardholder agreements from major banks such as Bank of America (NYSE: BAC) and JP Morgan Chase (NYSE: JPM) required credit card account holders to settle their disputes using non-governmental arbitration firms. These firms essentially acted as kangaroo courts, siding with the credit card companies the vast majority of the time.
The majority of the arbitration cases that banks had were done through a Minneapolis-based arbitration company named the National Arbitration Forum (NAF). Eventually there was so much public outcry in the form of congressional investigations, regulatory complaints and lawsuits from consumers that NAF and another major firm stopped hearing consumer credit cases all together.
As more light is shined on these arbitration firms, it’s becoming increasingly clear how bad of a deal these arbitration firms really were for consumers. The Wall Street Journal recently uncovered that the National Arbitration Firm, is actually owned by a company called Accretive, LLC that had other subsidiaries that provided for collections and judgment lawsuits on behalf of companies that made use of NAF’s services to settle disputes with their customers. Essentially, there was one company that was playing judge, jury and executioner on behalf of the banks.
There have also been some rumors that banks monitored their success rate using various arbitration cases and then only chose to use the arbitration firms that gave the banks very high win percentages.
Fortunately for consumers, banks have responded following public outcry and federal investigation. Both JP Morgan Chase and Bank of America made the decision over the summer to stop their practices of mandatory arbitration. Bank of America says customers are now free to sue Bank of America to settle their disputes and JP Morgan Chase has ceased filing new credit-card arbitration cases and is re-evaluating their practices.
For several years, Credit Cardholder agreements from major banks such as Bank of America (NYSE: BAC) and JP Morgan Chase (NYSE: JPM) required credit card account holders to settle their disputes using non-governmental arbitration firms. These firms essentially acted as kangaroo courts, siding with the credit card companies the vast majority of the time.
The majority of the arbitration cases that banks had were done through a Minneapolis-based arbitration company named the National Arbitration Forum (NAF). Eventually there was so much public outcry in the form of congressional investigations, regulatory complaints and lawsuits from consumers that NAF and another major firm stopped hearing consumer credit cases all together.
As more light is shined on these arbitration firms, it’s becoming increasingly clear how bad of a deal these arbitration firms really were for consumers. The Wall Street Journal recently uncovered that the National Arbitration Firm, is actually owned by a company called Accretive, LLC that had other subsidiaries that provided for collections and judgment lawsuits on behalf of companies that made use of NAF’s services to settle disputes with their customers. Essentially, there was one company that was playing judge, jury and executioner on behalf of the banks.
Probably the worst part of the mandatory arbitrations agreements had with banks is that they were immediately able to get a judgment against you without giving you a day in court before a public judge. Consumers wages could be garnished without any legal action ever being taken.
There have also been some rumors that banks monitored their success rate using various arbitration cases and then only chose to use the arbitration firms that gave the banks very high win percentages.
Fortunately for consumers, banks have responded following public outcry and federal investigation. Both JP Morgan Chase and Bank of America made the decision over the summer to stop their practices of mandatory arbitration. Bank of America says customers are now free to sue Bank of America to settle their disputes and JP Morgan Chase has ceased filing new credit-card arbitration cases and is re-evaluating their practices.
