Credit card arbitration: Things every credit card consumer must know

Martin Beckett
Jul 16, 2007
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Most of the credit card owners are not aware of the fact that there is a mandatory arbitration clause with almost every credit card. This means that if you have been wrongly charged by the credit card company, you can't go to courts. Instead, you can put up your case before an arbitrator, who is generally chosen by the bank.

With the rise in credit card usage this arbitration procedure has become very common, this in effect has made the process of disputing debts, very difficult for the credit card consumer.

What is woefully wrong with arbitration is the mandatory nature assigned to it. Though arbitration is a fair and efficient way to handle disputes, the whole process can become entirely lopsided once the fairness of the entire exercise comes into question. It becomes grossly inefficient and favorable to the credit card issuing companies and often the interest of consumers is compromised.

There are few drawbacks to credit card arbitration proceedings.

The customer might not be entirely aware of arbitration proceedings and could be too ill equipped to negotiate contracts.

The proceedings during arbitration are not generally open to public.

The arbitration agency, because being chosen by banks and are dependent on the goodwill of repeat litigants have strong incentives to rule in favor of businesses than consumers.

Though the consumer can do nothing about it there are things which if take care of can help him a lot during the arbitration proceedings. Here are few of them.

Respond to the arbitration group carefully and promptly. All the mails you get should be screened properly and make sure that you don't miss out on an arbitration mail. The deadlines with arbitration are strict and they should not be missed at all.

Get your credit report and check it for errors if any. Get them corrected before your case for arbitration comes for hearing.

Get professional help. Things can get pretty messy during such proceedings and if the amount in your dispute funs into few thousand dollars, an attorney will really help.

The attitude of fighting it out won't help always and it will pay if you try to settle things.

Credit card arbitration proceeding is a necessary evil. Efforts are on to get rid of this nuisance, but until it happens, being vigilant and proactive is the only option with credit card consumers.