Consumer advocates slam credit-card arbitration
They charge the deck is tilted in favor of banks in disputes with credit-card holders.
from the July 16, 2007 edition
Page 4 of 4
What to do if arbitration looms
If you find yourself in a credit-card dispute, here are some steps you might consider:
Read your mail and respond to it quickly. If you get a certified letter from an arbitration group, read it carefully. The charge may be wrong, or the creditor may have bought the debt from someone else. Even if you don't recognize the creditor, respond right away. Arbitration deadlines are strict.
Get your credit report. Credit reports can be requested free online once a year at www.annualcreditreport.com. If your report contains errors, deal with them promptly before your arbitration case is heard. But don't worry about your credit score, says Paul Bland, staff attorney at Public Justice. Lenders often have their own ways to determine creditworthiness based on your report, he says, so your score may be of limited value.
Consider hiring a lawyer. An attorney for either a court or an arbitration case may cost more than it's worth if the debt is only a few thousand dollars. But "people who don't have a lawyer won't know some of the basic things to contest," such as whether or not a debt has passed its statute of limitations, says Mr. Bland.
Learn about the arbitrator. Depending on who makes the claim against you, you may have the right to object to the arbitrator assigned. Consider striking any arbitrator who's a "creditors' rights" attorney.
Try to settle. Neither arbitration nor litigation is cheap. A debtor may have to pay thousands of dollars in attorney's fees tacked on by the creditor. So if you owe the money and the debt isn't old, negotiate with the collection agency or debt buyer. They probably bought your debt at a greatly reduced rate and may agree to a reduced payment.
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