Post by unlawflcombatnt on Jul 23, 2007 15:17:20 GMT -6
Below is an excerpt from Harvard lawyer Elizabeth Warren about the practice of credit card companies and others of inserting fine-print arbitration clauses into their agreements. The title of the article is
Stacking the Deck
by Elizabeth Warren
"Senator Russ Feingold and Representative Hank Johnson have introduced legislation to stop the fine-print, mandatory arbitration clauses that show up in millions of credit card agreements...."
(the full text of the legislation is included in the follow-up post to this one.)
"Why is this such a big deal? Arbitration sounds like a cheap, fair way to settle disputes. But a study from the Christian Science Monitor shows another reason: the arbitrators are beholden to the repeat players (credit card companies) that pay their fees. The top ten arbitrators ruled for the customers just 1.6% of the time....
How did this happen? The credit card companies keep track of how arbitrators rule, and they can strike those they don't like. Customers don't have a big information base about how the arbitrators ruled in the past, and they end up with whatever arbitrator the companies pick. It is just one more way the deck is stacked against ordinary consumers.
Consider the story of Harvard Law Professor Betsy Bartholet. In her first few cases, she ruled for the credit card companies, and she was asked to do more arbitrations. But once she ruled for a customer, her career as an arbitrator was over. As the CSM reports, sometimes the credit card company didn't even bother to strike her--they just reported that she had a scheduling conflict. As a result, someone who might have listened to a customer's story was always unavailable...."
California is reportedly the only state requiring public disclosure of consumer banking/credit-related arbitration cases. Below is a graphic from the Christian Science Monitor showing the outcome.
Note how 99.9% of arbitration cases were initiated by the creditor or debt-purchaser, and that over 96% were decided in favor of the creditor or debt-purchaser.
Stacking the Deck
by Elizabeth Warren
"Senator Russ Feingold and Representative Hank Johnson have introduced legislation to stop the fine-print, mandatory arbitration clauses that show up in millions of credit card agreements...."
(the full text of the legislation is included in the follow-up post to this one.)
"Why is this such a big deal? Arbitration sounds like a cheap, fair way to settle disputes. But a study from the Christian Science Monitor shows another reason: the arbitrators are beholden to the repeat players (credit card companies) that pay their fees. The top ten arbitrators ruled for the customers just 1.6% of the time....
How did this happen? The credit card companies keep track of how arbitrators rule, and they can strike those they don't like. Customers don't have a big information base about how the arbitrators ruled in the past, and they end up with whatever arbitrator the companies pick. It is just one more way the deck is stacked against ordinary consumers.
Consider the story of Harvard Law Professor Betsy Bartholet. In her first few cases, she ruled for the credit card companies, and she was asked to do more arbitrations. But once she ruled for a customer, her career as an arbitrator was over. As the CSM reports, sometimes the credit card company didn't even bother to strike her--they just reported that she had a scheduling conflict. As a result, someone who might have listened to a customer's story was always unavailable...."
California is reportedly the only state requiring public disclosure of consumer banking/credit-related arbitration cases. Below is a graphic from the Christian Science Monitor showing the outcome.
Note how 99.9% of arbitration cases were initiated by the creditor or debt-purchaser, and that over 96% were decided in favor of the creditor or debt-purchaser.