American Express Co, Discover Financial Services and Citigroup Inc face the allegations in two antitrust lawsuits filed by customers who had to sign arbitration agreements in order to be issued credit cards.
Three of the largest U.S. credit card issuers began a trial on Monday to defend a complaint that they colluded to force customers to agree to settle disputes through arbitration rather than in class action lawsuits. Arbitration increases costs on individuals. It would be less expensive if consumers collectively pursued claims in class actions.
U.S. District Judge William Pauley in Manhattan is hearing the cases without a jury.
The plaintiffs are seeking an order from Judge William Pauley. They aim to have the judge order American Express, Discover and Citigroup to remove arbitration clauses from their cardholder agreements.
Everything I need to know for now is in a single line from the Reuters report, stating that these two joined suits “were filed in 2004 and 2005”. All the early media reports are passing along dire cautionary grumblings from the lead plaintiff and advocacy group reps who are living in the past. They apparently have utterly ignored how the consumer arbitration landscape would change a few years later.
In Summer 2009 America’s Sweetheart Attorney General, Lori Swanson, busted the cabal of Accretive, Axiant, Mann Bracken, Wolpoff, et al and the National Arbitration Forum. They’d in essence built a giant meat grinder for credit cases which was completely rigged against the confused and battered consumer. Those players which did not implode, like Mann Bracken, got out alive by swearing off consumer arb.
The remaining private arb forums, AAA and JAMS, rewrote their policies to heavily favor consumers and avoid becoming the next casualties. In kind, the arbitration clauses in recent credit card contracts, including those from DFS and AmEx, have become quite deferential to consumers. When elected, arb cost exposure is very high only to a business; the consumer cost is low and fixed, sometimes free. Private arb now so disfavors the card lenders that some have *voluntarily* deleted their contract clauses.
The whining about current arb clauses has mostly come from lawyers — those for the debt industry trying to control costs and from consumer “defense” attorneys who pretend that class actions are not mainly about enriching themselves. Hip pro se litigants aren’t complaining at all, having learned to use arb as leverage and quite happy to quote the Supreme Court decision from AT&T Mobility-v-Concepcion when demanding their right to arbitrate.
Resident,
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Boiler