Bank of America announced that it is no longer requiring its customers to resolve disputes using mandatory arbitration.  This decision applies to the bank’s consumer credit cards, auto loans, mortgages and deposit accounts.  The change will be reflected in future BOA customer agreements. 

The move by the bank means consumers can now go to court to resolve disagreements.  For more than a decade, banks have included mandatory arbitration clauses as a routine part of their contracts with customers.

Following in the footsteps of the National Arbitration Forum (NAF), the American Arbitration Association (AAA) said on Tuesday they would no longer handle consumer debt collection disputes.

The American Arbitration Association said it will stop participating in consumer-debt-collection disputes until new guidelines are established. Its decision came two days after the National Arbitration Forum said it would stop accepting new cases.

This is another huge win for consumer rights. More than 94% of arbitration cases are won by the credit card companies. Consumers are at a big disadvantage in credit card collection arbitration.

Consumers are slowly regaining their legal rights and the credit card companies are being put in their place.

After being sued by the Minnesota Attorney General’s Office, the National Arbitration Forum (NAF) has agreed to pull out of the credit card arbitration business.  The MN AG’s suit alleged consumer fraud, deceptive trade practices, and false advertising. The suit alleged conflicting ties between NAF and debt-collection law firms that represented major credit-card companies. The suit also alleged that Accretive LLC owned stakes in such collection law firms and the NAF, sending arbitration business between the two.

The settlement between NAF and the MN AG’s Office, includes that, by the end of this week, NAF will stop accepting new consumer arbitrations of any sort. These include arbitrations over disputed credit-card debt as well as new lines of business the NAF has moved into, such as arbitrating consumer debts in healthcare, telecommunications, utilities, mortgages, and consumer leases.

You can read more about the settlement:  http://tinyurl.com/n8bd2w.

Tomorrow, April 29th is Arbitration Fairness Day in D.C.   Corporations are using forced arbitration to take advantage of consumers and avoid accountability when they do harm.  Arbitration is a private system companies use to solve disputes with consumers.  There are no judges or juries.  There is no appeal process.   Forced arbitration traps consumers into waiving their rights to sue, participate in a class action lawsuit, or appealing an unfair resolution to a conflict.  The consumer does not have access to a courtroom, a judge or a jury.  Most forced arbitration clauses are buried in the fine print of credit card agreements, car loans, insurance agreements and other contracts – clauses that people like you and I are agreeing to everyday. 

Let’s do something to end forced arbitration.  Here’s what you can do:  (1) Visit the website www.FairArbitrationNow.org.  It is an action center for putting an end to forced arbitration.  (2) Sign the petition on the www.FairArbitrationNow.org website.  The petition will be used in conversations with congressional leaders to show how important this issue is to voters.  Adding your signature will help make a strong case for banning forced arbitration now.  (3) Attend Arbitration Day on April 29th in Washington, D.C.  (4) Meet with your local representatives in their offices or write to your local newspaper.  Companies have been stacking the deck against consumers, forcing consumers to waive their rights and play by the companies rules.  Now is the time to stop companies from evading accountability.

Thankfully, there is already legislation moving through Congress to put an end to forced arbitration.  The Arbitration Fairness Act would disallow companies from using forced arbitration in civil rights, employment, consumer, or franchise disputes.

Join me in asking members of Congress to support the Arbitration Fairness Act, which will end the practice of forcing employees and consumers to sign away their rights to legal protections and access to courts.  Sign the petition today:  http://action.citizen.org/t/9119/petition.jsp?petition_KEY=1904

Thanks!

Most companies try to include arbitration clauses in their contracts with consumers these days.  Usually the arbitration clause does not provide the option of opting out of arbitration.  Today, I was able to review a Rent-A-Center contract which had an arbitration clause.  It seems that Rent-A-Center gives consumers the option of opting out of the arbitration clause but it requires quick movement on the part of the consumer.  Rent-A-Center’s contract requires the consumer to opt out within 1 week of signing the contract.   However, since most consumers have no idea what arbitration is all about, when they read the arbitration clause and opt out provisions they see no reason to act.  For those of you who do not know what arbitration is, here’s a short description:  If you agree to arbitration it means that any disputes between you and the company will be decided by a third party arbitrator instead of through the court system.  There will not be a judge or a jury deciding your dispute.   So if you are thinking about renting from Rent-A-Center, make sure to read the arbitration clause right away and follow the instructions to opt out immediately.  It may save you lots of time and headache in the future.