In what looks to be a landmark win for consumers, the Minnesota Attorney General has filed a suit against the Minnesota-based National Arbitration Forum (NAF), also know as the FORUM. The FORUM handles mandatory credit card arbitration cases as well as collection agency arbitration hearings. We’ve written a number of pieces slamming NAF in the past:

• Arbitration vs. Court
• Arbitration – Fair or Foul?
• Wrongful Termination Exposes Deceptive Practices At NAF

The Minnesota AG’s suit, alleges:

In short, the National Arbitration 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.

Defendants’ conduct described above constitutes multiple, separate violations of Minn. Stat. § 325F.67. Defendants have placed before the public statements that are untrue, deceptive, and misleading, with intent to sell or increase the consumption of services. By failing to disclose and omitting material facts, Defendants have further made deceptive and fraudulent public statements in violation of the False Statements in Advertising Act.

Among the deceptive practices named in the suit:

• Represents to the public that the FORUM is fair and impartial. Websites run by the FORUM: adrforum.com, forthrightsolutions.com, and
  arbitrationanswers.com actively promote the FORUM with such phrases as: “The FORUM is an independent administrator of alternative dispute resolution services”, “The FORUM is independent and neutral. It is not affiliated with any party.” In fact, 60% of the cases NAF handles are brought to them by a collection agency named Mann Bracken, who shares the same parent company.
• Solicits credit card companies to use their services and in some cases helped drafted the credit card agreements forcing consumers to use mandatory arbitration instead of the court system.
• Actively encouraged business clients to steer arbitration filings to the Forum.
• Used elaborate corporate ownership structures to disguise the fact that parent company of both NAF and Mann-Bracken.

Update! As part of a settlement agreement reached on July 19 in response to this lawsuit, the National Arbitration Forum said it would stop accepting new cases as of this Friday, July 24.

Link to complaint.

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