Arbitration Clauses

Frightened of too much 'bad publicity' arising from fully-blown court cases, many companies - including home builders, car salesman, banks, credit card vendors, health offices and medical establishments - are asking customers to sign papers agreeing to arbitration in the event of any problems, billing issues, etc.

It Grips My Shit would like to advise people that arbitration strips consumers of their rights, and that it benefits nobody... except of course the corporation asking you to sign what may seem like an innocuous form.

• An arbitration claim will normally cost you a large chunk of change to set up.
• You are often limited to the evidence you can bring to an arbitration session.
• Arbitration sessions are generally held in far away offices so as to deliberately disadvantage the consumer.
• Arbitration decisions can rarely, if ever, be overturned.
• There is NO public record of any arbitration.
• Awarded damages are generally much lower than if made in a proper court setting.

Worst of all though are the relatively new arbitration services springing up across the country. Arbitration services actually sell their services to corporations, claiming they will save them money. They claim to be non-partial and unbiased but secretly market themselves as "an effective tool for collecting debts"

One arbitration service is NAF (National Arbitration Council), a company specializing in credit-card arbitration, and the recent subject of a major investigation by Business Week.

Employing some 1700 freelance arbitrators, accusations are made that NAF often rushes its part-time employees into making snap decisions, often blaming inadequate paperwork from the very corporation they are claiming to represent. It is also alleged that NAF deliberately delays arbitration hearings until a sympathetic (to the corporation, naturally) arbitrator can be scheduled.

If anyone is still under the impression that arbitration is a good thing for the consumer, it grips my shit to report that in California (one of the few states where arbitration results are made public) creditors (i.e. the corporations) won 99.8% of the disputes handled by NAF.

Richard Neely, a former West Virginia supreme court justice is quoted as saying "NAF is nothing more than an arm of the collection industry hiding behind a veneer of impartiality". His words are supported by the statistic that in a 26-month period (ending March 2007), and out of almost 34,000 cases handled by NAF, a grand total of just 30 were awarded in favor of the consumer.

NAF is now the subject of a lawsuit brought by the City of San Francisco, accused of making awards in favor of creditors (corporations) without sufficient justification. The city's attorney further alleges (in the same Business Week article) that NAF strips consumers of their legal right to a fair collection process.

I wonder why NAF didn't opt for arbitration?