California Credit Law Blog

Consumers might assume that Experian, Trans Union and Equifax restrict the the information they collect to creditors to whom consumers have applied for credit. On the contrary, the credit bureaus sell personal and financial information to various companies. The credit bureaus were recently criticized by the national mortgage brokers' association for selling "trigger lists" containing personal and financial information on prospective borrowers to sub-prime real estate lenders. Introduced in 2005 by Experian, a basic trigger list includes the names and contact information of people who recently applied for a mortgage. A more complete list includes credit scores, credit card debt summaries and estimates of the equity owned by prospective borrowers. By late 2006, consumers were complaining to the Federal Trade Commission that they were getting calls from sub-prime lenders as explained in a December 2007 article in USA Today.

The FTC, which is supposed to regulate credit bureaus, has taken no action on the sale of trigger lists according to USA Today.

Posted by Mark F. Anderson | Permalink | Email This Post

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The San Francisco City Attorney apparently has some enthusiastic cheerleaders for its recent suit against the National Arbitration Forum (NAF), which we discussed here.

Credit Slips is a terrific credit and bankruptcy blog which contributors are mostly law professors with deep knowledge about their topic. Professor Bob Lawless's post today provides links to previous posts in the Credit Slips blog about the NAF. Those posts include some nightmarish horror stories about consumers' experiences with arbitration. He also notes the NAF's high win rate for creditors and describes how the NAF acts almost as if they are a disguised debt collection agency.

We are encouraged by this commentary. Mandatory arbitration is a very bad way to resolve consumer disputes.

Posted by Carol McLean Brewer | Permalink | Email This Post

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Our consumer law firm has learned that if a potential client's dispute is covered by an arbitration clause, we generally won't take the case. There are several reasons. First, the company on the other side uses the arbitrator frequently. Since the company wouldn't continue to use the arbitrator without good results, the arbitrator has an incentive to rule for the company. Second, there's no requirement that the arbitrator follow the law. If an arbitrator doesn't like a consumer's case, that's the end of it; there is no right to an appeal as there is in court. Third, arbitrations can be enormously expensive upfront, since arbitration is essentially a form of private justice system. Finally, even if there's a statutory right to attorney's fees for the winning consumer, because the arbitrator doesn't have to follow the law, there is no guarantee that the arbitrator will award any fees at all.

We were delighted to read in The San Francisco Chronicle's recent article that San Francisco City Attorney Dennis Herrera has sued the Minneapolis-based National Arbitration Forum (NAF), one of the nation's biggest arbitration companies, for unfair business practices. The lawsuit says the NAF "is actually in the business of operating an arbitration mill, churning out arbitration awards in favor of debt collectors and against California consumers."

The complaint cites statistics showing that of 18,075 cases brought before one of the NAF's arbitrators from January 2003 to March 2007, only 30 resulted in victories for consumers.

"The lengths to which [the NAF has] gone to ensure that California consumers lose in arbitrations against debt collectors is shocking," Herrera said in a statement.

Continue reading "National Arbitration Forum Sued by San Francisco City Attorney" »

Posted by Carol McLean Brewer | Permalink | Email This Post

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