Beware the Arbitration Trap the Credit Card Companies Set for You

Earlier this summer, we sounded the alarm about binding mandatory arbitration (BMA) clauses in the fine print of cable bills sent out by Comcast.  Comcast was not the first company to pull this trick on consumers and, sadly, we’ve learned it is far from the last.

Today, Public Citizen releases a ground-breaking report, The Arbitration Trap: How Credit Card Companies Ensnare Consumers [pdf]. It shows how credit card companies rig their contracts with consumers, using binding mandatory arbitration to evade accountability, strip consumers of their rights and enforce their will. In fact, arbitrators rule for business between 94 and 97 percent of the time.

In a nutshell, BMA is private, corporate-dominated secret “court” that overwhelming rules against consumers. In this world, merely by signing your name on the dotted line, you have forfeited your right to a trial by jury. If someone steals your identity and runs out to buy a $4,000 plasma TV – and the credit card company wants YOU to pay for it – the dispute will automatically bypass the public civil justice system. Instead, it goes straight to an arbitrator who may have heard thousands of cases for that same credit card company. 

Arbitrators make all their dough from repeat business, so it’s no

surprise that they usually rule in favor of business. Consumers are

left with no way out because the decisions they make are final and

there is little room for appeal. 

Here is what you can do to stand up to this corporate bullying from credit card and other companies:

  • Pressure Congress: Write your representatives in

    Congress and ask them to support the Arbitration Fairness Act of 2007

    introduced by Sen. Russell Feingold (D-Wis.) and Rep. Hank Johnson

    (D-Ga.).

  • Protect Yourself: Read our report [pdf] and learn all of the ways you can protect yourself from getting trapped in arbitration.
  • Tell Others: E-mail this post to friends and family.

Have you suffered from binding mandatory arbitration?  Share your story in the comments.   

UPDATE: Watch ABC’s coverage of our report here.