There is legislation pending in Congress to ban or curtail pre-dispute arbitration clauses in consumer credit contracts.  In a CMA Daily News article, Mark Hutchins contends consumer lawyers are disseminating misinformation about arbitration and the National Arbitration Forum.  Hutchins claims  NAF arbitration is a fair, inexpensive option to resolve disputes.  Yeah, right.  And cutting your leg off is a good way to treat an ingrown toenail.

Hutchins' article takes a wrong turn at the outset.  He states, "[f]irst, arbitration does not stack the deck against consumers.  No one wants a system that is unfairly tilted in favor of one type of party over another, and courts reviewing arbitration awards would never allow it."  At the risk of being accused of spewing forth misinformation, OF COURSE creditors want, and have obtained, a system stacked in their favor.  Courts have almost no authority to overturn factual or legal conclusions in an arbitration award, and they rarely do.

Arbitration is NOT less expensive than litigation in court.  Hutchins cites examples of NAF filing fees slightly lower than comparable filing fees in Texas and California, as if these were the only fees charged in arbitration.  It's like arguing a Ford Taurus is about the same as a Mercedes because the  price of an oil change is similar.  What Hutchins leaves out is that NAF then charges for participatory hearings, written rulings, motions, etc.  In court, a consumer does not pay these additional fees.  NAF has set up a system so arbitration IS cheaper if you are a creditor obtaining essentially default arbitration awards, and I'm sure this is a big selling point for NAF when it attends debt buyers' conferences promoting NAF arbitration.  But to try to sell this as something cheaper for consumers to vindicate their rights is simply not true. 

And if arbitration is so cheap and efficient, why am I staring at a file where Wolpoff and Abrahmson sought an NAF arbitration award on an old MBNA account that includes a request for over $6,000 in attorney's fees for legal work consisting of essentially forms prepared by paralegals?  Does anybody at NAF even care that Iowa law prohibits attorney's fees against a consumer in a consumer credit transaction?  Do these out of state attorneys even know anything about Iowa law?  Talk about lawsuit abuse.

Hutchins then argues arbitration is more efficient because creditors do not have to hire attorneys in the states where the consumer resides.  From where I sit, $6,000 in fees for a few computer generated forms does not look all that efficient to me.  But that is hardly the only problem.  If the lawsuit were brought in an Iowa court, out-of-state attorneys would have to associate local counsel or request admission in Iowa under the rules and subject themselves to ethical requirements imposed by the Iowa Supreme Court.  Hutchins thinks it's a good deal arbitration can proceed from Minnesota against an Iowa consumer.  I don't. 

The problem with his argument, is Iowa law requires consumer credit litigation to take place in the county where the consumer resides.  The arbitrators are from Iowa.  The consumer is from Iowa.  Creditors get away without hiring local attorneys because NAF rules simply ignore Iowa law and its protections for consumers.  Rather than being a plus for arbitration, this is simply another example of forum rules biased in favor of creditors.   Consumers receive no benefit from out-of-state arbitrations.  If documents are later needed from the arbitration to contest the award, the consumer is faced with an entity beyond the Iowa court's subpoena power.  In fact, many consumers are confused by a letter sent by regular mail from Minnesota containing an arbitration demand or award, and they do not realize the significance of the letter or that it triggers important deadlines for protecting their rights.

Hutchins and other consumer arbitration advocates try to bolster their claims with statistics.  In the words of Mark Twain, there are three kinds of lies--lies, damn lies and statistics.  Rather than waste time refuting the bogus statistics, I will share one key observation.  Consumer attorneys uniformly oppose NAF arbitration.  Credit card banks nearly all provide for, and support, NAF arbitration. If it is a fair, efficient and cheap way to resolve disputes, why do consumer attorneys all oppose it?  If it is such a good deal for consumers, why do credit card banks and debt buyers support it.  Look at your cardholder agreement and your credit card statement.  Do these suggest to you some deep concern by credit card banks for consumer fairness? 

And here is the rest of the story--a little information about Mark Hutchins from the bio provided with the article.  He worked in management in Asset Acceptance's legal department for more than five years.  Asset Acceptance is a well known debt buyer.  Asset Acceptance is known to me as a debt buyer who has attempted to collect debt that is beyond the statute of limitations.  In other words, the consumer doesn't owe the debt and has good defenses.  There have been allegations that some Asset Acceptance accounts were "re-aged." Re-aging a debt can involve posting payment to an account that was never really made to revive the statute of limitations.  Whether that was done, or who did it, is unknown, but there is no doubt it is a concern.  A common complaint with NAF arbitration is that its arbitrators essentially "rubber stamp" many awards where the creditor has not complied with NAF's own rules, has not followed applicable law, and has issued awards with inadequate proof.  Debt buyers like Asset Acceptance can have real problems proving a case in court, because they frequently lack the documents and witnesses necessary to win if they meet informed opposition.  In Iowa, they frequently do not even have the documents necessary to obtain a default judgment.  It is no wonder NAF arbitration looks like such a great option to them  But does it follow that it's a good deal for consumers?   

Is NAF arbitration biased against consumers?  Forget the statistics.  If it looks like a duck, walks like a duck and quacks like a duck--it's probably a duck.     

Sometimes it's a little difficult to find something to do in Des Moines.  Last night was an exception.  I went to a Bon Jovi concert at Wells Fargo Arena.  Normally I leave a concert with my ears ringing because of the loud music.  I left the two Bon Jovi concerts I went to at Wells Fargo with my ears ringing because of the crowd noise.  Nobody leaves disappointed.

When Bon Jovi says the only reason he comes to Des Moines is to hear the crowd scream, you tend to believe him.  The band definitely receives a warm welcome here.  The music's great and they really put on a show.  

The Bon Jovi song "Have a Nice Day" reminds me of complaints my clients make against abusive debt collectors.  After a host of illegal threats to do God only knows what, the collector ends the conversation with "have a nice day," knowing full well he has intentionally done everything he possible can to intimidate, coerce, cause stress and ruin the person's day.  Life is too short to allow some idiot breaking the law to purposely ruin even one of your days on earth.  

Debt collection abuse should not be tolerated.  Respond with a no contact letter, an unfair debt collection lawsuit and, oh yes ... be sure to tell the abusive collector to "have a nice day."   

Here is a link to Have a Nice Day by Bon Jovi.

"If the world gets in my face, I say ... have a nice day."

http://www.youtube.com/watch?v=UheKmPY1mNw&feature=related