Minnesota Atty General Suit Alleges the National Arbitration Forum Is Fraudulent
Today, the Minnesota Attorney General sued the National Arbitration Forum, the major arbitration firm that banks use to prosecute consumers who owe credit-card debt. The AG’s complaint states that NAF represents to the public, the courts, and consumers that it is independent, operates like an impartial court system, and is not affiliated with any party.
However, what the consumer does not know is that NAF works alongside creditors behind the scenes against the interest of consumers. The truth is that NAF is actually controlled by major collection law firms that represent credit-card companies. A New York hedge fund known as Accretive LLC has cross ownership of major collection law firms and the NAF sending collection cases between the two.
Consumer advocates have long known that NAF has created a a system whereby its arbitrators (lawyers and judges hired on a contract basis) have powerful incentives to rule in the creditor’s favor. For example, if a retained arbitrator begins to rule against the credit card companies, NAF drops him or her as an arbitrator.
Bank of America, JPMorgan Chase, Citigroup, Discover Card, and American Express use NAF.
Last year, the San Francisco City Attorney sued NAF based on similar allegations; that case is still pending.