This is an interesting story because we always hear about it from the consumer side, rarely do we hear it from the National Arbitration Forum side. For those who don’t know about the NAF, it’s essentially the biggest ‘objective’ dispute resolution service in the United States. Chances are, if you own a credit card, cell phone, or any number of other common products, you’ve unknowingly agreed to settle any dispute through the NAF’s legally binding, mandatory arbitration program. It just goes to show that the Supreme Court’s decision to allow pre-dispute arbitration has led to a private justice system of sorts where banks and credit card companies can purchase the results they want. Unfortunately, cash is king and this all comes at the expense of consumers who are forced into the system
Recently, Harvard Law Professor Elizabeth Bartholet was unceremoniously dumped from her position with NAF. She took up the position in the first place because she wanted to make a little extra cash. Prior to this incident, she had ruled over 19 cases, and in each one, she had ruled in favor of the credit card companies – with the exception on one which she ended up dismissing completely.
However, on her 20th case, the consumer also happened to be an attorney. He requested a hearing and filed a counterclaim against the credit card company stating that they had wrongly charged him penalty fees and interest, which subsequently damaged his credit rating and further disrupted his finances. After reviewing the facts, Bartholet ruled in favor of the consumer and ordered the credit card company to pay the consumer damages in the amount of $48,000.
In one case out of 19 others, she rules in favor of the consumer and the credit card company throws a temper tantrum. They go to her bosses and the next thing she knows, she’s getting a letter from the NAF stating that she was unavailable to hear any more cases because of a schedule conflict. Naturally, she took exception to the letter because she never requested removal from the position due to scheduling conflicts…they were trying to make it look like she had voluntarily left when that simply wasn’t the case.
Bartholet went over her direct boss’ head and had several discussions with higher ups of the NAF about why her removal – and the fact that they tried to make it look like she had removed herself – was systematically unfair. Unfortunately, they couldn’t be budged. She was left with little choice but to write a letter of resignation since they would not allow her to oversee any more cases. In the letter she acknowledges that the system is “dramatically biased in favor of the financial services industry.”
But here’s where hell hath not fury because she wasn’t going to take this lying down. A lawyer from Illinois contacted her about his client’s case. He wanted her to testify about the systematic unfairness of the NAF and their policies. Well, NAF said no, she couldn’t testify given her insider’s knowledge. She didn’t take that lying down, either. She got herself a lawyer and they went before a judge with their case. Her lawyer won and she got to testify on behalf of the guy from Illinois.
Bartholet was also called in to testify in front of the Senate Judiciary Committee, which is the party looking into doing away with pre-dispute arbitration as part of the credit card industry reform. Her testimony only added fuel to the fire, as it were.
What I find most interesting about this is that she is providing blatant proof of ‘unfair and deceptive’ practices and yet we’re still sitting on our hands. Arbitration is completely unfair in my opinion, for the very reasons that Bartholet testified to. The system is biased, basing their decisions on who has the most money and guess what, the credit card companies do. But, the NAF has fairness guidelines in place and when an arbitrator exercises those guidelines, she is punished for it. And seriously, the icing on the cake for me was the fact that they tried to make it look like she had removed herself from case work due to scheduling conflicts.
I’m not up on all my legalese, but I would think that type of action should have some sort of illegal connotations. I don’t know, do we have any lawyers out there that can clear that up for me? How did they get away with that?
At any rate, I don’t know the outcome of the case in which Bartholet testified to, but I do know that NAF is getting some heat from the Senate Committee right now. So, Bartholet may not be working there anymore, but she is doing a whole bunch of interviews and giving the NAF a lot of bad press.
Can’t say as I feel sorry for them. What about you?