Litigation

Arbitration looks better now, doesn't it?

By Ted Frank

The litigation lobby condemns the use of mandatory arbitration provisions in credit-card agreements to reduce the expense of litigation (and Dodd-Frank regulations are likely to end the practice, raising costs for honest consumers), claiming that the success rate of credit-card companies in arbitration supposedly demonstrates bias, but as a Sunday New York Times story points out, it's not like consumers fare better in court, where the default rules are considerably stricter than in arbitration. In litigation, a robosigner can obtain a default judgment 100% of the time; meanwhile, in arbitrations, consumers win partial victories nearly 20% of the time even when they have defaulted. This is something Sarah Cole and I pointed out in 2008. Alas, the New York Times story doesn't mention the possibility of alternative dispute resolution, and how Congress is acting to take that away.

Full post as published by Point of Law on November 02, 2010 (boomark / email).