Washington Business Daily

Is it really true credit card company can't take me to court for defaulting because of the arbitration clause?

Lately I've been hearing a lot about people getting their court cases brought by the credit card companies for failing to pay their bill because of the arbitration clause or provision that is part of the cardholder agreement when you sign up. I have been scared that they can get a judgement against me by suing me in court, but now people are using the arbitration thing to get it thrown out of court. How does it work?

Public Comments

1. Arbitration = when you and the credit card company have a dispute, but you both agree to take it to an arbitor (think Judge Wapner), instead of a courtroom. Binding arbitration = no judge will overturn an arbitration verdict, "no matter how wacky the result" (quote from a court decision) Mandatory binding arbitration = you agreed to binding arbitration when you used the credit card. It's on page 30 of the fine print that was sent with your first statement. Oh, by the way, due to the large volume of arbitration hearings brought by the credit card companies, some arbitrators have begun to act as if the credit card company pays their salary. (So good luck getting a fair hearing). Congress has a bill stuck in committee to fix this (The Arbitration Fairness Act of 2007), but the cc industry is lobbying (i.e., bribing) congressmen to kill the bill.
2. Yeah. The whole arbitration thing is put in there to protect the credit card companies from lawsuits by forcing you to give up your right to have your case heard in court. But it applies to both parties, so now it's kind of backfiring on them since people figured out that they can use this to stop them from collecting on a debt in a court. They will probably try to serve you in a regular court. It's important that you go and show up for that court date. Bring with you a copy of your cardholder agreement that has this arbitration provision in it. If you don't still have it, get it online from their website. Make three copies. When you get to court, show it to the judge. Always try to pay your debts, but I don't think it's a bad thing to make them pay for putting in this stupid arbitration rule that gives them immunity from most lawsuits and sends legitimate legal claims to a kangaroo "court". Maybe after losing several thousands of dollars they will take out that stupid provision that should be illegal anyway.
3. You talk about arbitration, as if it's a good thing. It's not. When you agree to arbitration you are essentially signing your rights away.
4. * The corporations that mandate arbitration in the contract are not always bound by the same clause; they may retain the right to sue the consumer, even though the consumer has to waive their right to sue, in order to procure those services. * Arbitration firms do repeat business with the corporations. Consumers don’t. The potential for bias is huge. Public Citizen (citizen.org) has reported on the problems associated with arbitration. Credit card co’s won in something like 95% of cases, and this was only in the single state that requires decisions to be public, California . In the other 49 states its entirely secret. This also hides numerous complaints from the public when they’re researching companies before buying. * Public Citizen also reported on one home warranty co using a specific arbitration firm that was owned by a disbarred attorney. The attorney’s name appeared on state corporation records years after the company claimed he was no longer with them, and documents signed by him were used in the report.