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Mandatory arbitration report reveals skewed system.

Article Excerpt
Companies in many industries include binding mandatory arbitration clauses in their contracts with consumers, but little information is available on the outcomes of such arbitrations. California is the only state that requires arbitration companies to provide any data.

In September, the Washington, D.C.-based public-interest group Public Citizen released a report analyzing some of that data. The results revealed a system that strongly favors the corporations that hire the arbitrators.

In the report, The Arbitration Trap: How Credit Card Companies Ensnare Consumers, Public Citizen looked at nearly 34,000 cases involving credit card companies in binding mandatory arbitration that one arbitration provider--the National Arbitration Forum (NAF)--handled in California between 2003 and 2007. The findings describe how the companies use NAF as a debt-collection tool.

"Credit card and other companies drive millions of dollars in business to arbitration firms, which in turn hire arbitrators to rubber-stamp rulings that favor business and then pass...

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