SOURCE: Milberg LLP

September 15, 2009 10:47 ET

Milberg LLP Files Class Action Against NAF for Consumer Fraud and Breach of Contract by Favoring Creditors During the Arbitration Process

National Arbitration Forum, Inc. ("NAF") Sued for Violation of Various Federal and California State Consumer Protection Laws and Breach of Contract

NEW YORK, NY--(Marketwire - September 15, 2009) - The law firm of Milberg LLP has filed a class action lawsuit in the United States District Court for the Central District of California on behalf of all persons who used NAF's arbitration services during the period from June 1, 2006 to the present, inclusive (the "Class Period"). The complaint is available from the Court or can be viewed at Milberg LLP's website at www.milberg.com.

Until recently, NAF held itself out as a leading forum for consumer arbitrations, which is how many consumer debt disputes are resolved. An arbitration forum must above all be impartial, so that consumers can be confident that their disputes with creditors (e.g., banks, credit card companies, phone companies, etc.) will be heard fairly, as would be the case if the dispute was resolved by a court of law. The class action lawsuit filed against NAF and related parties alleges that NAF has misled consumers for years in this regard because it was owned by and/or beholden to a debt collection agency and debt collection law firm, such that in reality it was a debt collector, not a neutral forum for resolving disputes by the debt collection industry against consumers. The result of these alliances was near perfect success rates by debt collectors against consumers in NAF arbitrations.

More specifically, the complaint alleges that NAF, National Arbitration Forum, LLC ("NAF LLC"), Mann Bracken, LLP ("Mann Bracken"), Accretive LLC ("Accretive"), Agora Fund I GP, LLC, Axiant, LLC, and Forthright Solutions (collectively "Defendants"), falsely held NAF out to be independent and unaffiliated with any persons or entities within or outside the collections industry and falsely presented its arbitration services as neutral. According to the complaint, Mann Bracken is a law firm that claims to specialize in consumer debt collection matters, but is a debt collector in its own right. NAF and Mann Bracken are both owned by Defendant Accretive who owns and controls both NAF and Mann Bracken, and their related entities. According to the complaint, NAF is now "under siege by local and state prosecutors for working alongside creditors, rubber-stamping illegitimate arbitration awards against consumers, deceiving the courts and the public, and undermining the integrity of the arbitration system."

The complaint specifically alleges that NAF maintained a near perfect success rate -- ruling in favor of business entities -- by engaging in improper, deceptive and corrupt acts, including: (a) establishing incentives for arbitrators to favor debt collectors over consumers; (b) disregarding consumers' evidence and/or arguments; (c) overlooking and violating its own Code of Procedure to benefit debt collectors, and ultimately, large creditors; (d) disregarding creditors' lack of evidence; and (e) failing to provide the bona fide arbitration services it promised to consumers. The complaint also alleges that NAF breached its contractual obligation to provide arbitration services to consumers, and that NAF directly benefitted from, and was unjustly enriched by the contractual breaches.

About Milberg

Milberg LLP has been representing individual and institutional investors for nearly 40 years and serves as lead counsel in federal and state courts throughout the United States. Please visit the Milberg website (http://www.milberg.com) for more information about the firm. If you wish to discuss this matter with us, or have any questions concerning your rights and interests with regard to this matter, please contact the following attorneys:

Contact Information

  • California Office:
    Jeff Westerman or Sabrina Kim
    New York Office:
    Peter Safirstein or Andrei Rado
    Milberg LLP
    Phone number: (800) 320-5081
    Email: contactus@milberg.com
    (Principal Office):
    One Pennsylvania Plaza
    New York, NY 10119

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