Articles Posted in Arbitration

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A serious problem for Alabama consumers and consumers around the country is the wide spread practice of forcing consumers to “accept” arbitration agreements. These often say that the consumer can not file or participate in any class action. Thus, times where an Alabama consumer is cheated out of $50 has to be filed individually which, as a practical matter, means most cases are not filed and consumers are left frustrated.

The Ninth circuit recently ruled that these class action waivers are unconscionable under California law. Read this short post by the Consumer Law & Policy blog for more information and the direct link to the case.

This is an excellent decision as it is important for Alabama consumers and consumers around the nation to have the option to pursue the bad guys in a class action. While the Ninth circuit does not have authority over Alabama, any good law is helpful to get more and more appellate courts making the right decision.

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We are not big fans of arbitration as it is often very unfair for Alabama consumers. We recently read a post in Credit Slips which is so typical of what Alabama consumers face when they are hit with an arbitration claim, particularly arbitration claims in the National Arbitration Forum (NAF). Here is the guts of the story but also read the entire post:

Had a very interesting experience today. Responded to an arbitration claim by FIA Card Services f/k/a MBNA denying client agreed to arbitration and disputing amount owing. Requested an in-person hearing and client paid $250 fee for the hearing. Originally the hearing was scheduled at a location more than 3 hours away from my office. I objected and it was rescheduled about an hour away. The arbitration was Harold Curry. I showed up at 12 noon. At 12:45 no one from FIA appeared or called. The arbitrator called NAF to find out what he should do and left a message that was not answered. Mr. Curry and I went into an office and talked a while. I pointed out to him that the claim was based on breach of contract, but no contract was ever produced, so he could not possibly determine the parties’ obligations or damages. He asked me what my client owed MBNA. I told him I did not know and that it was not my job to help MBNA establish damages. If they were so concerned, they could have shown up for the arbitration hearing. He admitted that they never show up and he has never had an attorney show up before. Just before I left, he suggested that we might reschedule. I told him I would not agree to rescheduling and that I believed he had no choice but to find an award in favor of my client. This made him extremely uncomfortable and he indicated he would need to talk to someone at NAF first. I reminded him that he was supposed to be impartial and he told me he would give me his decision in a few days.

We are seeing more and more Alabama consumers who have been nailed with arbitration awards and they never received notice of the arbitration or they could not seem to get a hearing. We will be posting more on this growing issue facing Alabama consumers.

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Arbitration is harming more and more Alabama consumers. Many things we buy come with arbitration agreements and we have no choice if we want the product. For example, it is difficult to find a new car dealer who does not require arbitration but yet the auto dealer association begged Congress to prohibit arbitration agreements with manufacturers. Virtually all credit card agreements require arbitration. The list goes on and on.

Is this bad for consumers? To help you gain the facts to make your own decision, please read the entire post from the Consumerist – we have provided a small sample of the post:

What started as a way for peers to come to a sort of expedited gentleman’s agreement has evolved into a extra-judicial system for corporations to enforce their will and protect themselves from censor. The Christian Science Monitor found that the top 10 arbitration firms decide in favor of companies 98.4% of the time. This seems hardly representative of a system between parties “of generally similar sophistication and bargaining power.”

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We read an interesting post by a well respected consumer and bankruptcy lawyer Jay Fleischman where he argues that he can help his bankruptcy clients by avoiding arbitration of claims with creditors after bankruptcy. Here’s the gist of what he does:

I typically put a clause in my Chapter 13 plans that specifically rejects the arbitration provisions contained in any consumer credit agreements.

We are not sure if this will work but bankruptcy lawyers should consider trying this – no downside and lots of upside for the clients.

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An excellent resource for anyone interested in consumer law is http://pubcit.typepad.com/clpblog/ which is the Consumer Law and Policy Blog. A recent article addressed the amazing question of whether the victim of Identity Theft can be forced by the credit card company to arbitrate disputes – when the victim never agreed to arbtiration or anything else about the account.

The bottom line from this excellent article by Jeff Sovern is that the courts are somewhat split on this issue. Read the article in its entirety here – http://pubcit.typepad.com/clpblog/2007/04/arbitration_and.html

Another resource for you is to join our Facebook Fan Page – Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

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