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Key to credit card disputes is to respond, experts say

NORTH BAY – While a widely publicized survey by an advocacy group found consumers lost 94 percent of disputes with credit card companies, attorneys and experts said many lose because they don’t challenge the claim and that the odds of winning increase significantly when they do.

"I would say probably only 1 percent of my consumer cases actually make it to arbitration, the rest of them are all lost by default," said Joe Henderson, a Windsor-based arbitrator who was named in the study. "It's just like a judge. If you don't show up, you lose."

The report released by advocacy group Public Citizen focused on 34,000 credit card cases where consumers bound by arbitration agreements were forced by contract to arbitrate for unpaid debts.

Opponents of the study questioned the methodology, noting only cases brought by the companies were mentioned. When compared with trial decisions, they said results actually favor consumers more in arbitration.

"In an overwhelming majority of these cases it is simply someone who won't pay their bill that is clearly owed,” said John Hall, spokesman for the American Bankers' Association. Public Citizen “didn't address the circumstances of the disputes at all," and “relied heavily on cases that businesses brought against consumers, not on those cases brought against companies. When you add in those cases, the results are much more even."

Another study funded by the National Arbitration Forum, while of a significantly smaller sample, looked at cases where consumers filed claims against lenders and found that in those cases consumers won at least half the time.

"On the whole, when you look at the number of disputes nationwide that actually get to arbitration as compared to those who go to trial, you do better in arbitration simply because you can actually get your case heard," said Norman Brand, a San Francisco arbitrator.

The Federal Arbitration Act was aimed at relieving stress in the court system. Mr. Henderson said if consumer cases were suddenly dumped into the system, customers would have to stand in an even longer line behind criminal cases. A typical arbitrator can handle anywhere from two to 60 cases in day.

"People are trying to find a balance between the use of arbitration to avoid courts and deprivation of people's rights to a jury trial," said Clay Clement, a partner with Santa Rosa-based Clement, Fitzpatrick & Kenworthy.

"I would argue that your chance of having your case more squarely based on fact and law is enhanced by having an arbitrator that has studied the law extensively,” he said

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