Credit Arbitration

Credit arbitration clauses favor corporations over consumer .



20th April 2015 · By Charlene Crowell NNPA Columnist Although arbitration is often associated with labor unions, millions of consumers are also affected by it and don’t even know it. Often consumers find the extremely small print of credit agreements difficult to read. A new report released by the Consumer Financial Protection Bureau (CFPB) found that more than three in four consumers surveyed did not know whether they were subject to a credit arbitration clause.

. Even worse, CFPB determined that despite arbitration clauses dominant presence in consumer credit agreements, the clauses work more in favor of corporations than consumers. All too often, credit terms are seldom negotiable. In short, from a consumer perspective the choice becomes ‘take it or leave it’. ““Forced arbitration isn’t an alternative forum for resolving disputes; it’s a get-out-of-jail-free card for corporations,” said Ellen Taverna, legislative director of the National Association of Consumer Advocates.

“.” Over a five-year period, CFPB analyzed evidence from consumer contracts, court data, surveys and more to determine whether arbitration clauses offered a fair and transparent resolution of consumer complaints in six consumer financial markets. . Payday loans and prepaid cards were found to have the highest usage of arbitration clauses,Other CFPB findings include: • Over the five years studied, 1,847 arbitration disputes were filed but the total amount of relief and debt forbearance that consumers received was less than $400,000; • Corporations obtained decisions that required consumers to pay $2.8 million, largely for disputed debts during the same period; •

“Companies claim that arbitration is simpler, easier, and cheaper – but they fail to mention that forced arbitration rarely provides the impartiality or meaningful review that a consumer can get in a court of law,” says Mitria Wilson, a vice-president with the Center for Responsible Lending. “In the worst examples, we’ve seen consumers being asked to travel to faraway places to try to enforce their rights only to find out that the ‘impartial’ arbiters were selected exclusively by the companies that their dispute is with. These proceedings are virtually impossible to get overturned through a court of law — even if blatant mistakes are made.” This article originally published in the April 20, 2015 print edition of The Louisiana Weekly newspaper.


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