Research and Statistics

6 tips for dealing with binding credit card arbitration

Binding arbitration on credit cardsYour credit card company says you owe them money. You disagree. What do you do? If you find yourself in binding mandatory arbitration with a credit card company, don’t despair. There are a number of steps you can take to get as fair a shake as possible. 

1.Don’t ignore letters. If you get a letter from your credit card company or an arbitration company about an arbitration proceeding being filed against you, pay attention. “Don’t ignore the letter because if you don’t respond, your case will be decided in favor of the credit card company,” says Lewis Maltby, president of the Workrights Institute and a former National Arbitration Forum (NAF) arbitrator.

2.Get a lawyer. While it’s not easy to find a lawyer who will take these cases, a lawyer will help you navigate the process and you’ll increase your chances of success. Sally Greenberg, executive director of the National Consumer’s League, a consumer rights organization, recommends a member of the National Association of Consumer Advocates. Your lawyer may be able to fight the arbitration in court, as some courts are throwing out binding arbitration provisions, especially those that are seen as egregiously unfair to consumers.

3.Keep track of correspondence. Start marking dates on a calendar, noting deadlines for corresponding with the arbitration company. “A party who receives an arbitration notice can best handle the situation by responding within the allotted time period — to the NAF — of 30 or 45 days, significantly longer than the typical 20 days allowed in litigation,” says Roger Haydock, NAF president.

4.Make them prove it. Ask to see the specific credit card agreement you signed that shows that you agreed to arbitration. “Demand that they prove that you agreed to arbitration,” says John O’Donnell, a senior researcher and investigator at Public Citizen.

5.Ask for copies. Request the charge slips that you signed and a bill that itemizes any fees, interest and other charges that have been added to the bill. “In many cases, the credit card companies don’t have the original documents that show that the consumer ever signed up for the credit card in the first place, so there is no proof that you ever ran up the bills that are in dispute,” says says Paul Bland, a staff attorney with Public Justice. Also, credit card companies are lax in terms of providing an itemized list of fees and interest, which can in some cases double what you owe.

6.Go face-to-face. Ask for an in-person hearing held near your home. Such hearings typically involve a higher fee for the consumer, but give you a better chance of winning than a hearing by mail or by phone, says Bland.

Related story: “Credit card mandatory arbitration: What it is, how it works

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Credit card arbitration: What it is, how it works

Many large credit cards and most store cards require you to bring disputes to an arbitrator, an alternative to court, if you can't reach a solution with the company

Published: April 21, 2008

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