National Arbitration Forum Class Action Settlement

A class action lawsuit settlement has been reached with the National Arbitration Forum over allegations it failed to resolve debt collection disputes fairly and impartially. If you were involved in a debt collection dispute handled by the National Arbitration Forum, you may be affected by the terms of the proposed class action settlement.

NAF was the largest arbitration company in the United States for consumer credit disputes, and was selected by companies to act as an independent and impartial party to resolve legal disputes with consumers outside of the court system. According to the National Arbitration Forum class action lawsuit, however, NAF made decisions in disputes that favored large creditors and debt collection firms that regularly used NAF to resolve debt claims. 

The NAF class action lawsuit claims that:

(1) NAF and creditor law firms failed to disclose potential financial conflict of interest that could have impacted NAF’s ability to act independently and impartially. This could have resulted in: a) damages to consumers or b) a loss of opportunity to be heard in court concerning whether or not NAF should have been able to arbitrate the claim at all. The alleged conflict of interest in this case is that an investor owned significant portions of NAF and, through a separate debt collection entity, worked in concert with creditor law firms in proceedings initiated with the NAF.

(2) NAF decisions favored large creditors that frequently used NAF to resolve consumer debt claims. For example, thousands of old debt claims, which would have been thrown out of court due to the expired time limits, were continued because they were filed with the NAF. NAF had an incentive not to dismiss these cases because these large creditors were good customers.

You’re included in the NAF arbitration settlement if you were involved in a consumer debt collection dispute and arbitration was initiated by an NAF entity. The NAF settlement does not include any money award for class members, but it does provide benefits in the form of a permanent injunction that requires NAF to stop certain activities that violate federal and state consumer protection laws, including:

* NAF cannot accept a fee for processing any new consumer arbitration.

* NAF cannot administer, process, or participate in any new consumer arbitration.

* NAF must dismiss all currently pending consumer arbitrations where not prohibited by its own procedural rules or federal and state laws. NAF has dismissed $1,091,054,820.98 worth of claims since the beginning of this lawsuit.

You do not have to do anything to remain in the settlement, but if you want to exclude yourself and retain your right to sue individually, you must submit your request by July 5, 2011.

You can find more information about your rights in the NAF Class Action Lawsuit Settlement at www.ArbitrationSettlement.com. The case is In re National Arbitration Forum Trade Practices Litigation, MDL No. 10-2122.