Is Arbitration Fair? Proof that Arbitration is Unfair

The Minnesota Attorney General has filed a lawsuit against one of the big private arbitration companies, the National Arbitration Forum (NAF), alleging their arbitration process is rigged in favor of big businesses who pay it big bucks.

Minnesota-based NAF is the largest consumer credit private arbitration company which recently came under fire for its extensive "back room" relationships with the very companies that hire it to get favorable judgments against consumers. The AG alleges that NAF "secretly worked alongside creditors, and against consumer interests, in seeking to have mandatory, predispute arbitration clauses inserted in credit agreements signed by consumers" and appears to have good proof of it.

NAF has long claimed it was "independent and neutral" but it turns out that a group of New York hedge funds invested in the arbitration company and also acquired a majority stake in a debt collection agency which acquired the collection operations of the law firm Mann Bracken. So, it appears that the whole operation is run, from front to back, by debt collectors who, quite obviously, have a vested interest in getting money out of consumers and not in finding out whether or not consumers actually owe the money.

The case caption is State of Minnesota v. National Arbitration Forum, No. 27-09-18550, and appears to be filed in state court with claims that NAF committed consumer fraud, deceptive trade practices and made false advertising statements.

Minnesota Attorney General Lori Swanson is to be commended for calling a spade a spade and going after NAF, which has been the target of consumer advocates for years with claims of bias and favoritism toward the debt collectors that hire it.

The whole NAF back-room favoritism and bias more clearly came to light when Deanna Richert, a former manager at NAF, filed a federal lawsuit against NAF claiming she was denied promotions and terminated last year because of her gender and age, which were, respectively, female and over 40. In the lawsuit she also revealed how NAF had a policy of favoring its big client companies and even had a nickname for them ("famous parties"). The lawsuit was picked up by the Wall Street Journal and consumer advocates quickly realized that the truth about NAF's arbitration had come out. NAF, of course, says it was doing nothing wrong.

Apparently that was the smoking gun that caused Swanson to go after NAF.

We've said for years that arbitration sucks and both Richert's lawsuit and Swanson's lawsuit are now revealing more of the truth that anyone ever did before. Maybe now people will realize that arbitration is like playing poker with a stacked deck --- and it isn't stacked in your favor, folks.

There are ways to fight back against unfair arbitration and you can read more about it here:

Burdge Law Office
Helping consumers fight back since 1978.

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Known nationwide as a leading Lemon Law attorney, Ronald L. Burdge has represented literally thousands of consumers in "lemon" lawsuits and actively co-counsels and coaches other Consumer Law attorneys. From 2005 through 2018, attorney Ronald L. Burdge has been named as the only Lemon Law Ohio Super Lawyer by Law and Politics magazine and Thomson Reuters Corp., Professional Division. Burdge restricts his practice to Lemon Law and Consumer Law cases. The Ohio Super Lawyer results are published annually in the January issue of Cincinnati Magazine. Ronald L. Burdge was named Consumer Law Trial Lawyer of the Year 2004 by the National Association of Consumer Advocates, the nation's largest organization of consumer law private and government attorneys. "Your impact on the auto industry has been magnified many times over because of the trail you blazed for others," stated NACA's Executive Director, Will Ogburn. Burdge has represented thousands of consumers in Ohio, Kentucky and elsewhere since 1978 and is a frequent lecturer to national, state and local Bar Associations and Judicial organizations. Burdge is admitted to Ohio's state and federal courts, Kentucky's state courts, and Indiana's federal courts. Other court admissions are on a "pro hac" temporary, case by cases basis.