The credit card company and a borrower have the option to solve the disputes concerning outstanding payment through arbitration. The parties can proceed to arbitration if the credit card contract contains a mandatory arbitration clause. It is important to understand the process of credit card arbitration and what are the reliefs claimed by both the parties and how it is beneficial to either party.
The contracts of some credit card companies have a mandatory arbitration clause. The clause requires you to settle the dispute through arbitration, in which both parties agree to arbitration is the only means through which dispute resolution may be reached.
If the credit card agreement does not contain a mandatory arbitration clause either party still has the choice to initiate arbitration.
The process begins when the borrower or credit card company files a claim with the arbitrator. Depending on the circumstances, both parties may present their side of facts and evidence to the arbitrator.
The arbitrator may help the borrower and card-issuing company to negotiate with the debts by looking at written submissions and supporting documents related to the case. The decision recorded by the arbitrator is final and binding on both parties.
Effect of Arbitration
If the arbitrator finds in favor of credit card company, the card-issuing company is entitled to receive the debt and may enforce few collection measures, most common measures are:
- Freezing of bank account
- Attachment of property
- Charging late fees
In favor of cardholder:
If the arbitrator finds in cardholders’ favor. Then the cardholder may claim compensation for:
- False allegation
- Refund the charges of arbitration
- Claim for any further loss suffered due to card issuing company
Reliefs claimed by the borrower:
If the decision is in favor of cardholder company then the debtor can claim for a few reliefs mentioned below
- Payment by installments
- Reduction in debt amount
- Discount on the debt amount
Credit card scams
If a cardholder identifies any transaction to be fraudulent, the cardholder can inform the credit card company.
The card issuing company may file for credit card disputes if such fraudulent transactions used for dishonest means.
There are situations where a cardholder or the credit card company may face difficulties when assigning an arbitrator:
- Arbitration forums often show bias or an appearance of bias.
- Borrowers or issuers are not given adequate notice of arbitration proceedings.
- Arbitrators do not provide adequate information on the reasons for their decisions.
- Borrowers and issuer companies do not have a good understanding of the arbitration process and its implications.
If you are faced with a situation requiring arbitration, then both parties have the right to investigate the facts of dispute before filing a dispute. Few rights of both parties include:
- Check the credit card report and make sure there are no errors.
- Read and respond immediately to all correspondence you receive from an arbitration group.
- Research the arbitrator assigned to your case.
- Try to settle the dispute in an informal way before opting for arbitration. If the debt issues have long-lasting consequences then parties can file for arbitration.
HHS Lawyers and legal consultants can advise you on matters of credit card debts and debt collections. We work to aim result-oriented services in debt collection. If you need any advice on issues regarding credit card debts to call us for further consultation.