Last year, the Federal Trade Commission (FTC) held five round tables in three cities discussing consumer debt collection litigation and arbitration. (read more here) The agency issued this week Repairing a Broken System: Protecting Consumers in Debt Collection and Litigation and Arbitration, a report containing the findings, conclusions, and recommendations.
Chapter 3 of the FTC report addresses debt collection in arbitration:
The report finds that consumers are not given meaningful choice whether to enter into arbitration and that the debt collection arbitration process is fundamentally unfair to them. Creditors, collectors and arbitration forums should adopt changes to ensure that:
(1) consumers are given a meaningful choice about whether to arbitrate and a reasonable method of exercising that choice;
(2) neither arbitration forums nor arbitrators are biased or appear to be biased;
(3) consumers are given adequate notice of the commencement of arbitration and their costs of participating in arbitration are limited to the costs the consumers would have incurred to defend against similar proceedings in court;
(4) arbitrators issue reasoned, written decisions to support their awards; and
(5) arbitration and its results are sufficiently transparent to instill confidence in use of arbitration as alternative to the public court system. The FTC will continue to closely monitor, evaluate, and report, as appropriate, on whether debt collection arbitration models are providing consumers with meaningful choice and a fair process.
The complete report is available here.