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The Arbitration Trap: How Credit Card Companies Ensnare Consumers

This report details how arbitration firms and credit card companies enjoy a cozy, mutually beneficial relationship at the expense of consumers they force into binding mandatory arbitration. Using data from California, the findings provide a glimpse of how arbitration traps consumers throughout the country in unfair, secret proceedings where for-profit arbitrators make the rules. Public Citizen’s research uncovered consumers who spent years fending off collection agencies, cleaning up identity theft messes and struggling to bounce back from credit rating hits.

  • Read the report [pdf]
  • Read the press release
  • Read our news coverage
  • Read the testimony of Laura MacCleery [pdf] before the House Judiciary Subcommittee on Commercial and Administrative Law regarding the Arbitration Fairness Act of 2007
  • Read Public Citizen’s rebuttal to industry’s misleading statements about the report.
  • Read our fact sheet on the Arbitration Fairness Act of 2007
  • Read a letter of support of the Arbitration Fairness Act of 2007 signed by 32 groups
  • Learn ways to protect yourself
  • Read the blog
  • Read the statement of Joan Claybrook, Public Citizen President
  • Read the statement of Laura MacCleery, Director of Public Citizen’s Congress Watch
  • Read the statement of Troy Cornock, victim of binding mandatory arbitration
  • Read the statement of Sen. Russ Feingold (D-Wis.), sponsor of Arbitration Fairness Act of 2007.
  • Read our bibliography of law review articles critiquing binding mandatory arbitration
  • Examples of BMA clauses from MBNA (April 2006) and JPMorgan Chase & Co. (2005)
  • NAF California data Jan. 2003 to Mar. 2007* [Excel file]

    *This spreadsheet consists of the information on 33,948 National Arbitration Forum cases conducted in California between Jan. 1, 2003 and Mar. 31, 2007. It was compiled from quarterly reports that the National Arbitration Forum posted in a difficult-to-find place on its Web site in Adobe Systems’ Portable Document Format (PDF). Public Citizen converted them to an Excel spreadsheet so California residents and others interested in binding mandatory arbitration may do their own analysis of NAF arbitrations in California and of the records of NAF arbitrators.

    The PDF reports can be found here. To reach the reports from the NAF home page, click on the Focus Areas link across the top of the page beneath the NAF logo, and then click on “Consumer” on the drop down menu. On the consumer page, go to the “Resources” menu on the right side of the page and click on “California CCP 1281.96 Report.”