Credit Card Disputes May Land In Court


Did you know that when you sign your credit card agreement, you waive the right to sue the credit card company in the event that you have a dispute about your bill? It’s right there in your cardholder agreement, that pamphlet full of tons of incredibly fine print. Instead of legal recourse, you agree to arbitration, which is when an an ‘objective’ third party – though not a judge – moderates the dispute and the feuding parties agree to abide by his or her decision (the credit card company gets to choose the arbitrator). It can save both parties time and money, but in 94% of credit card arbitrations the companies come out on top, according to the National Arbitration Forum.

But credit card arbitration may be going away.

Taking Sides

The two large group that manage these arbitration procedures for the credit card companies have chosen to withdraw from the process, according to The Wall Street Journal.

The pullout follows a wave of lawsuits brought against the National Arbitration Forum, one of the two groups, for the way it handles disputes, the Journal notes. NAF reportedly has financial ties to debt collectors and has been accused of consumer fraud, deceptive trade practices and false advertising. Soon after the suits were filed, both the NAF and the second group, The American Arbitration Association, announced plans to stop accepting new arbitration cases.

What Now?

Ahead of the enactment of new credit card legislation aiming to protect consumers, credit card companies have been slashing credit line and hitting consumers with higher interest rates and fees.

Delinquencies and defaults have increased. But instead of going into arbitration, companies may instead have to change some of that fine print and go to court to resolve disputes, the Journal says.

Related Stories:

What the New Credit Card Bill Means for You

Back to School: Resist Credit Card Temptation

Angry Credit Card Holders Fight Back Online


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