Forced Arbitration Roadblock: An AmEx Flip-Flop on Arbitration

Like most credit card companies, American Express’ nonnegotiable fine-print traps its customers with restrictions that limit their right to sue. Consumers with legal claims against the corporation must take their complaints into private arbitration on an individual basis, and cannot band together with other potentially harmed customers in class actions.

But in a twist, a customer who said she tried but was ignored multiple times to go to arbitration to resolve an ongoing dispute with American Express, is now baffled that the credit card company is now trying to force her into arbitration on its own terms.

Here’s the background: In 2016, an unknown person allegedly used Michelle Barnett’s American Express credit card to make several fraudulent charges. Ms. Barnett said that when she discovered the charges, she disputed them multiple times with American Express by letter, email, and phone.

According to Ms. Barnett, American Express did not resolve the charges and instead charged her account off as an unpaid debt which it reported to all of the major credit agencies, damaging Ms. Barnett’s credit history.

Ms. Barnett went on to dispute the alleged debt on her credit report with Equifax, Experian, and Transunion. However, Ms. Barnett alleges that the credit agencies did not properly investigate the dispute as required of them by the Fair Credit Reporting Act (FCRA) and the debt remained on her credit reports. After her disputes with the credit agencies did not result in the removal the debt from her report, Ms. Barnett said that she attempted yet again to resolve the issue with American Express.

According to Ms. Barnett, she made three separate attempts in writing to go to arbitration, as required by the company’s contract terms, to dispute American Express’s continued claim that she owed the debt. American Express allegedly ignored these requests.

Ms. Barnett claims that after her repeated insistence that the debt was fraudulent, her multiple attempts to dispute the charges, and her efforts to go to arbitration, American Express filed a collections suit in court against Ms. Barnett.

After the collections case was filed, Ms. Barnett attempted to dispute the alleged debt and have it removed from her credit report an additional four times, but none were successful, she said. Forced to bear the cost of a collections suit and with no hope of obtaining relief on her own in sight, Ms. Barnett and her attorney Christopher Kittell sued American Express and the credit reporting agencies in a Mississippi federal court alleging FCRA violations.

In response, American Express filed a motion to invoke its forced arbitration clause to kick her claims out of court and into private, secret arbitration, after she herself had made previous attempts to settle the dispute there. American Express wants to choose the forum — the court system or arbitration — when it wants, where it wants while depriving Ms. Barnett and other customers like her of that choice.

Ms. Barnett’s ongoing case illuminates the true nature of forced arbitration as a tool for corporations to evade accountability and block claims against them. It is also a means to delay and defer consumer claims according to the whims of corporate giants.

Forced arbitration is a raw deal for consumers and Congress must act as quickly as possible to ban it. The Forced Arbitration Injustice Repeal Act, which prohibits forced arbitration in consumer and worker contracts, was passed by the U.S. House of Representatives in 2019 and introduced in the U.S. Senate. It is up to the new Congress to pass a law that bans forced arbitration and restores consumers’ right to choose how to get their claims against big banks and corporations heard.

National Association of Consumer Advocates (NACA) is a nonprofit association of attorneys and advocates committed to representing customers’ interests.