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Thursday, August 13, 2009

City Attorney Dennis Herrera Ups Ante in S.F.-Minnesota Credit Card Credit-Hogging Dispute

Posted By on Thu, Aug 13, 2009 at 4:45 PM

click to enlarge Don't worry, hypothetical Michigan Tech alum Chris L. Martin! Dennis Herrera has got your back.
  • Don't worry, hypothetical Michigan Tech alum Chris L. Martin! Dennis Herrera has got your back.
When Minnesota Attorney General Lori Swanson hogged credit last month for attacking a loophole companies use to prevent consumer lawsuits, observers said San Francisco City Attorney Dennis Herrera was getting the short end of the stick. A July 17 settlement between Swanson's office and the National Arbitration Association upended the U.S. credit card industry by making it harder for companies to avoid consumer litigation.

Herrera's office actually deserved partial credit for that suit, because he filed a related complaint in San Francisco last year. But Swanson gave nary a nod west. Today, Herrera announced that he'd leveraged the arbitration litigation to pressure Bank of America to get out of the bogus arbitration business entirely, and in the process offered Swanson a similar flip of the bird.

Consumer advocates

have long cried foul that mandatory arbitration has been quietly

slipped into the fine print of millions of credit card, cell phone, and

other consumer contracts, causing consumers to unknowingly sign away

their rights. Swanson's office forced a settlement by showing that the

top arbitration firm was owned by the same hedge fund that owned a

major collection agency, unearthing memos suggesting the resulting amalgamation would efficiently shove inflated credit card charges down

consumers' throats.

But

Swanson's case actually got its start in San Francisco, where Herrera's

office alleged that arbitration proceedings were systematically rigged

in credit firms' favor, resulting in anti-consumer resolutions 95

percent of the time. San Francisco attorneys kindly guided Minnesota state

barristers through the details of their suit when they came calling

last year.

Today, Herrera issued a press release announcing Bank of

America had "dropped a requirement that consumers with disputes over

their credit card debt enter into binding arbitration. The change will

enable consumers to file civil lawsuits against the bank to allege

unfair or illegal treatment. Bank of America, the nation's largest

bank, is the first major institution of its kind to announce it is

ending its use of mandatory arbitration."

Herrera's release described Swanson's July settlement with the arbitration firms, without mentioning her, or her office, by name:

"Today's

Bank of America decision follows an announcement last month by the

National Arbitration Forum that it would cease handling consumer credit

card arbitration matters." 

While two parties targeted in Herrera's

lawsuit have now voluntarily addressed some of the case's objectives, the litigation remains active in pursuit of "financial

penalties and other relief that may be deemed necessary," the release

said.

We'll have to give Herrera credit: He's a real card.

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