Credit card companies are out to get you – even if you don’t have a credit card, according to the May 29 ABC “Good Morning America.”
“You’ve heard of a no-win situation when it comes to fighting your credit card company. That may be more than just a cliché,” Jim Avila said.
But the woman in Avila’s story wasn’t even fighting her credit card company. She was fighting someone else’s, in an odd twist.
Anastasiya Komarova, who got mixed up with a credit card customer named Anastasia (no “y” in the name), was Avila’s extreme example. Komarova was also featured in a September 2007 report from left-wing activist group Public Citizen. That report, titled “How the Credit Card Companies Ensnare Consumers,” could easily have been the basis for Avila’s 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 didn’t 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 “usually boil down to three facts – (1) did the debtor open the account, (2) did the debtor incur the charge, and (3) did the debtor make the payment?”
In other words, most arbitrations occur because someone opened an account, made purchases with the card, then failed to repay the credit card company. “If those three facts are uncontested, there is very little to dispute,” Rutledge wrote. “Therefore it is unsurprising that banks enjoy high win rates in these sorts of actions.”
But when he chose an example, Avila didn’t choose an average arbitration case – 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 wasn’t even a customer.
Anastasiya Komarova, a Russian immigrant, was harassed by collection agencies for $11,000 owed to a company whose card she didn’t even have, Avila said.
“But when the case went to arbitration, not court, private arbitration, none of that mattered,” he reported. “She 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.”
She lost the case in arbitration – but eventually cleared her name in a public court, Avila later said. His report suggested “anyone” could be a victim of what actually amounted to a clerical error – the debt collectors went after the wrong Anastasiya.
“In Ms. Komarova’s case, the report fingers arbitration as the culprit, but the mistaken identity has nothing to do with arbitration,” the NAF said in a statement to the Business & Media Institute.
Avila didn’t say how common a case like Komarova’s 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.
“Good Morning America” co-host Robin Roberts called it a “David vs. Goliath” 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.