Magazine article American Banker

Divergent Reads of Arbitration Data by Chamber, Public Citizen

Magazine article American Banker

Divergent Reads of Arbitration Data by Chamber, Public Citizen

Article excerpt

Byline: Maria Aspan

An industry group's analysis of arbitration data provided by National Arbitration Forum Inc. has yielded wildly different conclusions from one conducted by the consumer advocacy group that first crunched the numbers.

National Arbitration Forum, which consumer advocates have accused of being biased toward lenders and debt collectors, defended its practices Tuesday by praising a study the U.S. Chamber of Commerce's Institute for Legal Reform released July 15.

That study, conducted by Navigant Consulting Inc., was based on the same data analyzed in September by the Washington consumer group Public Citizen. Both reports examined the 34,000 cases referred to National Arbitration Forum in California between 2003 and 2007.

Public Citizen said businesses won arbitration cases handled by the company 94% of the time, but the Institute for Legal Reform said consumers prevailed in 32.1% of the cases.

Taylor Lincoln, the research director for Public Citizen, who edited its report, said: "I don't think they got any different conclusions. I think they just tried furiously to spin the data."

Christina Doucet, a spokeswoman for the National Arbitration Forum, said the Minneapolis company had not been involved "with the methodology or the process" of the institute's report. However, it was "valuable to clear the record," she said. The report shows that "arbitration is in fact beneficial for the consumer."

Many card issuers and other consumer lenders include mandatory arbitration clauses in their contracts. Last week a bill to prohibit such clauses in consumer contracts was referred from a subcommittee to the House Judiciary Committee.

In March, the San Francisco city attorney sued National Arbitration Forum and one of its clients, Bank of America Corp.'s card unit, claiming the arbitration firm decides "in favor of the business entity and against the consumer 100% of the time. …

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