Debt arbitration firm reaches settlement with attorney general
The largest credit card debt arbiter has reached a settlement with the Minnesota attorney general with regard to a recently-filed lawsuit.
According to the terms of the settlement, the National Arbitration Forum (NAF) will no longer take on debt arbitration cases, including ones involving credit card debt.
The suit claimed that the NAF misrepresented its independence regard arbitration cases. It stated that the NAF worked with credit card companies to get arbitration clauses put into credit card agreements, and then had card companies appoint the firm as the arbiter.
“Now the company is out of this business,” Attorney General Lori Swanson said.
The suit also alleged that the NAF had financial ties to the debt collection industry. A hedgefund based in New York had invested money in the NAF while also having a majority stake in a debt collection firm.
According to the attorney general’s office, the NAF handled 214,000 arbitration claims during 2006, 60 percent of which were filed by law firms that had ties to the arbitration company.