According to a recent study, card issuers have a practice of pre-selecting credit card arbitration companies that they know will not rule in favor of the consumers. Of course, this comes as no surprise. In fact, I’ve posted recently about this fact, but that post was actually based on the personal stories of people that work with arbitration companies. This new study simply shows what I already suspected.
The reasoning behind the mandatory arbitration seems innocent enough. After all, it is a faster and less expensive method for resolving disputes than to take the case to court. Nonetheless, when credit card companies use unfair methods to select an arbitration company, it really puts consumers in a terrible situation.
The study found that the arbitration companies selected by companies such as Visa, MasterCard, Discover, and American Express have ruled in favor of the credit card companies the majority of the time. In fact, the arbitration companies have ruled in favor of the consumers only 1,700 times out of 34,000 cases that went into arbitration during the period that was studied.
The briefing held by Public Citizen was able to bend the ears of Representative Hank Johnson (D-Ga) and Senator Russ Feingold (D-Wis), as both politicians were present at the briefing. As a result, they provided testimony stating that they will work toward introducing legislation that will allow the customers to choose whether they wish to engage in arbitration or to go to civil court to settle their disputes.
Representatives from the American Bankers Association trade group have stated that the research results “varies wildly from other respected research on the topic.” While this research did focus only on California because it is the only state that requires arbitration results to be disclosed, most experts consider the results to be valid and sound.
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