MINNEAPOLIS (CN) – Minnesota says the National Arbitration Forum is in bed with the businesses that are trying to collect from its customers. The state claims the Forum misrepresents itself as a neutral party, while behind the scenes it “reaches out to, and in some cases actively assists, the very corporations that may bring collection arbitrations against consumers.” Consumers filed a similar class action in Chicago.
Minnesota Attorney General Lori Swanson says the National Arbitration Forum deliberately hides its relationship with Accretive LLC, a hedge fund that has invested tens of millions in the forum and effectively runs in, and also owns Mann Bracken LLP, a national law firm primarily involved in debt collection.
Nearly 60 percent of the Forum’s arbitration claims in 2006 were filed by Mann Bracken and its affiliates, the attorney general says – 125,000 of the 214,000 consumer debt collection arbitration claims the Forum processed that year.
“In short,” the state says, “the (Forum) reaches out to, and in some cases actively assists, the very corporations that may bring collection arbitrations against consumers – outreach that is at odds with the Forum’s public image of independence, neutrality, similarity to a court, and lack of ties to parties that appear before it and that is not in the best interests of ordinary consumers.”
The Forum is the biggest consumer debt arbitrator in the country, Swanson says. She accuses it of consumer fraud, deceptive trade and false advertising.
Credit card companies that do business with the Forum include MBNA/Bank of America, JP MorganChase, Citigroup, Discover, Deutsche Financial and American Express, Swanson says.
She also sued Forum affiliate Dispute Management Services dba Forthright.
The class action in Cook County makes similar allegations and refers to Minnesota’s complaint. Defendants in the class action are Mann Bracken LLP and FIA Card Services NA fka MBNA America Bank. The class numbers in the thousands, according to that complaint.