ABC Uses Weird Non-Customer Example to Attack Credit Card Companies
Credit card companies are out to get you â even if you donât have a credit card, according to the May 29 ABC âGood Morning America.â
âYouâve heard of a no-win situation when it comes to fighting your credit card company. That may be more than just a clichĂ©,â Jim Avila said.
But the woman in Avilaâs story wasnât even fighting her credit card company. She was fighting someone elseâs, in an odd twist.
Anastasiya Komarova, who got mixed up with a credit card customer named Anastasia (no âyâ in the name), was Avilaâs extreme example. Komarova was also featured in a September 2007 report from left-wing activist group Public Citizen. That report, titled âHow the Credit Card Companies Ensnare Consumers,â could easily have been the basis for Avilaâs segment.
The ABC story attacked credit card companies for winning high numbers of disputes with customers. It focused on arbitrations, which are private hearings between companies and cardholders.
Avila highlighted a lawsuit filed against the National Arbitration Forum (NAF) by the city of San Francisco, alleging the organization unfairly sides with companies in the disputes. According to Avila, credit card companies win 99 percent of the arbitration cases.
Avila didnât bother to mention that debt collection suits in public small claims courts also favor the lender between 96 percent and 99 percent of the time, according to an April 2008 white paper by Catholic University professor Peter Rutledge for the U.S. Chamber Institute for Legal Reform, which cited several studies on small claims statistics.
Avila also failed to explain why credit companies win most of their cases. Rutledge wrote that most arbitrations âusually boil down to three facts â (1) did the debtor open the account, (2) did the debtor incur the charge, and (3) did the debtor make the payment?â
In other words, most arbitrations occur because someone opened an account, made purchases with the card, then failed to repay the credit card company. âIf those three facts are uncontested, there is very little to dispute,â Rutledge wrote. âTherefore it is unsurprising that banks enjoy high win rates in these sorts of actions.â
But when he chose an example, Avila didnât choose an average arbitration case â one in which a cardholder has failed to make payments and the company is trying to get its money back. Instead, he chose a rare case where the customer wasnât even a customer.
Anastasiya Komarova, a Russian immigrant, was harassed by collection agencies for $11,000 owed to a company whose card she didnât even have, Avila said.
âBut when the case went to arbitration, not court, private arbitration, none of that mattered,â he reported. âShe lost because no matter how absurd the case, credit card companies rarely lose in the private hearings the small print in your contract insists upon, hearings arranged by, guess who: the credit card companies.â
She lost the case in arbitration â but eventually cleared her name in a public court, Avila later said. His report suggested âanyoneâ could be a victim of what actually amounted to a clerical error â the debt collectors went after the wrong Anastasiya.
âIn Ms. Komarovaâs case, the report fingers arbitration as the culprit, but the mistaken identity has nothing to do with arbitration,â the NAF said in a statement to the Business & Media Institute.
Avila didnât say how common a case like Komarovaâs is, but included plenty of voices accusing the arbitrators, and by extension the credit card companies, of bad business. Although NAF issued a statement quoted in the report, no representatives of credit card companies or banks were included.
âGood Morning Americaâ co-host Robin Roberts called it a âDavid vs. Goliathâ story, a common media label used to smear companies by comparing them to the Biblical giant who fell at the hands of the humble warrior David.