Minn. firm can't arbitrate credit card, other debt

MINNEAPOLIS — Attorney General Lori Swanson said Sunday that her office reached a sweeping legal settlement that requires a Minnesota company to get out of the business of arbitrating credit card debts and other consumer collection disputes nationwide.
The agreement comes less than a week after Swanson sued the National Arbitration Forum over its handling of debt disputes between consumers and credit card companies. The lawsuit accused the St. Louis Park-based firm of violating state consumer fraud, deceptive trade practices and false advertising laws by hiding financial ties to collection agencies and credit card companies.
"To consumers, the company said it was impartial, but behind the scenes, it worked alongside credit card companies to get them to put unfair arbitration clauses in the fine print of their contracts and to appoint the Forum as the arbitrator. Now the company is out of this business," Swanson said. "I am very pleased with the settlement."
The settlement takes effect Friday.
The National Arbitration Forum denied Swanson's accusations but said it decided to voluntarily stop administering consumer arbitration disputes because of mounting legal costs.
Mike Kelly, CEO of Forthright, which provides administrative services for the National Arbitration Forum, said consumers will now have "no meaningful alternative to costly and unpredictable litigation."
Kelly said the company doesn't have the resources to continue defending itself against state attorney generals, class action lawsuits and on other fronts. He said the forum remains committed to consumer arbitration, arguing it's the best and most affordable option for consumers.
"Without access to arbitration, consumer disputes will now be forced into an overcrowded and underfunded legal system, where many consumers who cannot afford attorneys will have to navigate complex court procedures," he said in a statement. link....