Credit Card Industry Sustains Blow

Read a credit card agreement , and you will likely find that disputes with the company have to go into mandatory arbitration. And not just any arbitration. You agree to go into arbitration (as opposed to suing) with — in many cases — the National Arbitration Forum. However, this body has strong ties to the credit card industry. Which probably why arbitration has proved so successful for credit companies in recent years.

Now, all of that is being called into question. The credit card industry is sustaining a blow as a settlement with Minnesota brings to light the fact that the NAF might have been engaging in false advertising and other practices that led them to appear to consumers as impartial, when really they favored credit card companies. The Minnesota settlement could result in the following, reports Business Insider :

Complete destruction of mandatory arbitration clauses is unlikely – the lobbyists for the related industries are sure to see to that.  But the back-and-forth could result in a few compromises that give consumers more power in choosing the location and forum for the arbitration , as well as increased abilities to appeal the arbitration decision.

While the credit card industry is likely to remain largely profitable and powerful, it appears that it will also be required to negotiate a little more with consumers. And that could mean good news down the road. Of course, the other side of the coin is that credit card companies will still want to make huge profits . They are likely to make up for any diminished cash flow through increased fees and interest rates.

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