Christopher Gilreath Commercial Law Blog on Lawyers.com

The Attorney General of Minnesota formally entered a consent decree on July 19 with the National Arbitration Forum (NAF), the country’s largest administrator of consumer arbitrations, forcing it out of the arbitration business after allegations surfaced that NAF was actually biased in favor of debt collection firms.  NAF had claimed to be a neutral decision maker in hundreds of thousands of debt collection cases.

For over ten years, Public Justice, a non-profit consumer protection law group, had argued that NAF was, in fact, biased, having ties to the collection industry, leading to serious abuses in consumer debt collection cases.

After uncovering new information about NAF, the Minnesota Attorney General filed suit July 14, alleging that the same people who owned the largest debt collection law firms also owned a substantial percentage of NAF while it was supposed to be a “neutral” decision maker in debt arbitration cases.  Many consumer credit cards mandate that disputes and debt collection matters be handled with binding arbitration, eliminating the rights of consumers to seek justice in court.

In exchange for dismissing the lawsuit, the consent decree between NAF and the Minnesota Attorney General forbids NAF from administering, processing, or in any way participating in any new consumer arbitrations on or after July 24^th.  This development is a significant step toward restoring transparency in consumer contracts and enabling individual citizens to seek justice before a true neutral decision maker.