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Sep 1, 2008 9:54 pm US/Pacific
Call Kurtis: Credit Card Arbitration
SACRAMENTO (CBS) ―
Fighting your credit card company might seem like a David versus Goliath battle. In California, your only option is arbitration, and the numbers show you have a 99.8 percent chance of losing.
"It seemed like this colossal joke," said Anastayia Komarova. She never had a credit card with MBNA, but the National Collection Agency said she did and owed them $7,000.
"There was apparently another woman with a similar name who was an authorized user of an MBMA card," she said.
She refused to pay, so NC Collections took her to arbitration, but never let her know.
"They told me that it went before a judge and there was a judgment against me and I was guilty by default by not showing up to the arbitration," she said.
San Francisco City Attorney Dennis Herrera sued the National Arbitration Forum for unfair business practices.
"They are the largest provider of arbitration services in the country," he said.
Critics and even former arbitrators say arbitration decisions are sometimes made in minutes with little information and often without debtor involvement.
"When you have close to 20,000 complaints and there are only 30 resolved in the consumers' favor, what do those statistics tell you?" Herrera said.
In a statement to our sister station, KPIX in San Francisco, NAF stated that those statistics are "outrageous and misleading."
After Anastayia's arbitration she was told that instead of $7,000, she now owed $11,000, "and to me that was just another proof that this whole thing was just a scam," she said.
Anastaysia took them to court.
"I had a jury and judge who actually cared what I had to say and then we won," she said.
Herrera is taking on the NAF on behalf of the consumers of California.
"The most important thing is that we make sure that business practices are reformed so that we really have an arbitration system utilized by NAF which is fair and equitable," he said.
You may not realize it, but when you sign a credit card application, you're agreeing to arbitrate billing disputes instead of going to court.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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