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Consumer Credit-Card Disputes - Collusion Lawsuit Challenges Mandatory Arbitration
Credit and charge-card marketers take away consumers’ right to dispute unauthorized use, erroneous merchant billing; and extra fees by requiring cardholders to accept mandatory arbitration clauses in disagreements.
A 2005 lawsuit filed against these marketers alleges that they met in secret numerous times between 1998 and 2003 to establish strategies for industry-wide imposition of mandatory arbitration clauses for settling consumer disagreements. The plaintiffs’ claim that the clauses “deprive cardholders of effective recourse for illegal anticonsumer and anticompetitive activity, secure an unfair advantage for defendants in the dispute-resolution process, and immunize defendants from collective action by consumers”.
DEFENDANTS: America Express; Bank of America; Capitol One; Chase, Bank One; Citibank/Diners Club; Discover, Household; First USA; J.P. Morgan Chase; MBNA; Wells Fargo.
Plaintiffs want the clauses, which also ban class actions and let companies skirt consumer protection and antitrust laws meant to prevent corporate misconduct, declared void.
MANDATORY ARBITRATION: Credit-card mandatory arbitration puts consumers at serious disadvantages because it:
- Forces unknowing waivers of constitutional rights;
- Does not give cardholders an opportunity to opt out of arbitration;
- Screens cases from public scrutiny;
- Compels cardholders to agree to biased, company selected arbitrators;
- Fast-tracks cases card issuers can win quickly;
- Prevents legal discovery of important information about a company?s disputed actions;
- Limits remedies available to wringed purchasers;
- May require consumers to pay arbitration costs.
