By Sarah R. Cole and Kristen M. Blankley. 113 Penn St. L. Rev. 1051.
In 2007, Public Citizen, a “national, non-profit public interest organization,” issued a report entitled “The Arbitration Trap: How Credit Card Companies Ensnare Consumers,” concluding that the arbitration process routinely exploits consumers. Public Citizen drew this sweeping conclusion after analyzing approximately 34,000 points of data the National Arbitration Foundation (“NAF”) collected about its California arbitrations.
Unfortunately, Public Citizen’s analysis of the NAF data does not support its conclusions primarily because its conclusions cannot be extended beyond the set of cases the data contains, i.e., collection cases filed by creditors, including credit card companies, against consumers with outstanding balances on their accounts. Rather than attempt to draw conclusions based solely on this data, Public Citizen instead extrapolates its conclusions to all consumer arbitration cases even though collections cases are unique. Public Citizen ultimately concludes that binding, mandatory arbitration is bad for consumers in all situations based on a data set comprised of practically all – upwards of 99.9% – collections cases . . . [keep reading]