There probably are few among us who have not found an error or disputed charge on our credit card statement. In most cases consumers are able to straighten these out with their credit card company. When they cannot, rather than head to court, cases are often arbitrated as part of the agreement that cardholders sign.
For more than 80 years, arbitration has helped Americans settle disputes fairly, quickly and inexpensively, without having to file a lawsuit or navigate the court system. However, some Members of Congress are using the current economic crisis as an excuse to try to eliminate arbitration when it comes to credit card disputes. The truth is this effort is being pushed by trial lawyers hoping to cash in on the fees from massive class action lawsuits.
In reality, eliminating arbitration will have devastating consequences for credit card customers. In cases that class action lawyers don’t feel would be profitable enough, consumers would be left with two options – try to navigate the court system alone or hire an attorney. Of course, studies show attorneys working on contingency generally require at least $60,000 to $75,000 in damages before considering taking a case. So, in most cases, those with claims under $60,000 will likely be left without a lawyer.
The result is that without arbitration, consumers will be stuck in the court system by themselves, without the benefit of representation. A 2006 Boston Globe review of Massachusetts debt collection proceedings in small-claims court found a system that often ignores individual rights and shows favoritism toward collectors and their lawyers – and “debtors, usually too strapped to afford a lawyer, must contend with this legal mismatch…” Furthermore, a study of debt collection cases in New York City conducted by the Urban Justice Center found that less than eight percent of consumers facing debt collection lawsuits
prevailed by having their cases dismissed – a rate four times worse than that of arbitration.
Conversely, consumers can file and pursue arbitration at minimal cost – and overall, are happy with the results. In fact, a 2005 study of arbitration participants conducted by Harris Interactive found that over 70 percent were satisfied with the fairness of the process and the outcome – including a sizeable number of those who did not ultimately win their arbitrations.
The choice is clear – arbitration is a time-honored, proven consumer-friendly alternative to litigation that should be preserved.
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