October 21, 2009
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News: Arbitration World Falls Apart
An industry that rose to the top very quickly, has hit bottom just as fast. Arbitration was once the preferred method for credit card companies looking to resolve account delinquency issues. In fact, most credit card companies outlined in the cards terms and conditions that arbitration was mandatory in settling credit disputes. However, in the wake of numerous investigations into allegations of deception and special interests of arbitration companies, many of these organizations have stopped taking on cases of credit disputes and ended existing client relationships. The move has left many credit card customers at a loss of what to do leaving many to do nothing.
Lenders have had to scramble to implement new methods of dealing with credit card delinquencies and to find economical ways to prevent the more costly alternative of court action. Additionally, arbitration companies like National Arbitration Forum (NAF) a Minnesota based firm and American Arbitration Association (AAA) a New York based firm have also had to find alternative resources for raising income to keep the companies a float. Both of these firms are global organizations with offices overseas. It is not known how the decision to shut down credit card debt arbitration services in the United States has affected their business overseas.
Some lenders took immediate steps to bridge the gap with delinquent cardholders by informing them that they no longer were required to use arbitration in settling their credit card dispute. Recently Bank of America Corp., the second largest U.S. card issuer who used NAF to arbitrate credit disputes, notified cardholders that they were no longer required to used arbitration. JPMorgan Chase, the largest U.S. card issuer, has stopped arbitration activities and is considering alternative methods of negotiations and removing the arbitration clause from card terms and conditions. Meanwhile, cardholders have found dealing directly with the lender and negotiating debt disputes is a more economical method and provides quicker results.