The Minnesota attorney general, Lori Swanson, said Sunday that her office had reached a legal settlement that would require 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 Ms. Swanson sued a Minnesota firm, the National Arbitration Forum, over its handling of debt disputes between consumers and credit card companies. The lawsuit accused the 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,” Ms. Swanson said.
Ms. Swanson had said the National Arbitration Forum handled more than 214,000 collection claims in 2006, 60 percent of which were filed by law firms with ties to the collection industry.
The National Arbitration Forum denied the accusations but said it decided to stop administering arbitration disputes because of mounting legal costs.
Under the settlement, the National Arbitration Forum must stop accepting any new consumer arbitration or taking part in processing or administrating any new consumer arbitration nationwide. The company must stop administering arbitration involving consumer debt including credit cards, consumer loans, health care and consumer leases, Ms. Swanson said.
The settlement allows the company to continue arbitrating Internet domain name disputes, personal injury protection claims and cargo disputes.
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