Minnesota Attorney General Lori Swanson is accusing a St. Louis Park company that arbitrates consumer credit disputes of consumer fraud, deceptive trade practices and false advertising.
Swanson filed a lawsuit today in Hennepin County District Court against National Arbitration Forum, claiming the company has misrepresented itself as independent and has hidden its ties to the collection industry.
Swanson said the company handled more than 214,000 collection claims in 2006, three-fifths filed by law firms with ties to the collection industry.
She said the National Arbitration Forum also paid commissions to credit card companies for using its services.
The lawsuit cites statements on the company's Web site saying the Forum is "independent and neutral" and "not affiliated with any party."
Swanson says NAF uses contract fine print to take away the right to settle a dispute in court.
"The National Arbitration Forum works very hard behind the scenes, alongside the credit card companies and other creditors, against the interest of ordinary consumers, to convince these credit card companies to put these arbitration clauses in the agreements in the first place, and then to appoint the Forum as the arbitrator of any disputes," said Swanson.
Many credit card and cell phone contracts require consumers to use arbitration to resolve billing disputes.
National Arbitration Forum officials issued a written statement, saying their process is fair and is not influenced by any outside group.
(The Associated Press contributed to this report)