2 Major Firms Abruptly Withdraw from Credit-Card Arbitration

Two important companies are withdrawing from arbitrating disputes between customers and their credit-card and cellphone companies. The action quickly followed a lawsuit against one of them last week by the Minnesota attorney generalʻs office. Mirroring the franchisee situation, the system has prevented customers from having their day in court.

This situation offers some interesting parallels for franchisees who have similar arbitration problems. For example, companies prevail over consumers 94 percent of the time in these cases, according to one of the firms, the National Arbitration Forum.

Franchisees have their own headaches with credit-card companies. They are charged up to 3 percent and more of the charge amount, a fact that much of the public is not aware of, and businesses can and do have credit card payments for goods and services charged back (meaning their account is debited the amount) by the credit card company after the payment has been approved at the time of purchase. Other costly complications can follow a chargeback.

See the Wall Street Journal article.