Law, College of


Date of this Version



113 PENN. ST. L. REV. 1051 (2009), pp. 1051-1079.


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.

Given the sweeping nature of the Public Citizen Report’s conclusions, we believe that additional data analysis is warranted. In fact, our data analysis establishes that many of Public Citizen’s claims are exaggerated and should be considered in context. In addition, and perhaps more importantly, our analysis of this data reveals that the consumer arbitration process provides a more pro-consumer environment for claims adjudication than does the traditional court system. This conclusion suggests that consumers should be less wary of the arbitration process even if the proposed Arbitration Fairness Act of 20098 is never enacted.

This article sets forth in Section II the primary arguments and conclusions of the Public Citizen Report, followed in Section III by a more detailed look at the underlying data. Section IV examines recent court decisions in which consumers claim that the NAF is an unfair forum, and the courts’ rulings that generally reject that argument. Finally, Section V sets forth these authors’ conclusions regarding the data.

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