Watchdog Blog

Beware the Arbitration Trap the Credit Card Companies Set for You

Earlier this summer, we sounded the alarm about binding mandatory arbitration (BMA) clauses in the fine print of cable bills sent out by Comcast.  Comcast was not the first company to pull this trick on consumers and, sadly, we’ve learned it is far from the last.

Today, Public Citizen releases a ground-breaking report, The Arbitration Trap: How Credit Card Companies Ensnare Consumers [pdf]. It shows how credit card companies rig their contracts with consumers, using binding mandatory arbitration to evade accountability, strip consumers of their rights and enforce their will. In fact, arbitrators rule for business between 94 and 97 percent of the time.

In a nutshell, BMA is private, corporate-dominated secret “court” that overwhelming rules against consumers. In this world, merely by signing your name on the dotted line, you have forfeited your right to a trial by jury. If someone steals your identity and runs out to buy a $4,000 plasma TV – and the credit card company wants YOU to pay for it – the dispute will automatically bypass the public civil justice system. Instead, it goes straight to an arbitrator who may have heard thousands of cases for that same credit card company. 

Clinton to Return Tainted Money

In a surprise move, Hillary Clinton announced that she would return contributions totaling $850,000 from convicted felon and captured fugitive, Norman Hsu.  Hsu bundled this obscene amount of contributions from about 260 other donors. Clinton’s campaign is following the urging of Public Citizen and others to return the tainted cash to each donor.

As we’ve mentioned before, Clinton is not the first to deal with unsavory fundraisers, and Clinton is not the only candidate to have received money from Hsu.  Around 24 Democrats have accepted campaign contributions from Hsu since 2004.

One can’t help but wonder who the 260 people Hsu collected money from are and what influence was promised in exchange.  So far, Clinton’s campaign isn’t disclosing the names of the donors bundled by Hsu.  The names of these individuals and their ties to Hsu should be public record – just as all bundled contributions should be.

Unfortunately, the ’08 candidates have been even more secretive than Bush and Kerry were in ’04 about who their bundlers are and how much they have raised (are there more Hsus waiting to drop?). None of the presidential candidates in this election are adequately disclosing their bundlers to the public, and none of the campaigns – until now – have bothered to fully check the bundler’s backgrounds. You can bet that each campaign is feverishly doing background checks on anyone who has given them (or their opponents) hefty sums of money. 

New Report on Lobbyists-Fundraisers

Today, Public Citizen released a new report on its website www.WhiteHouseforSale.org comparing current lobbyist-fundraisers to those from the 2004 presidential campaign.

There is more and more news of candidates returning money from fundraisers with illicit pasts.  You would think the presidential hopefuls would be persuaded to end the practice of allowing lobbyists to funnel money into their campaigns, but so far most have remained hooked on this bundled cash.

One key finding of our report is that the number of lobbyist-fundraisers for 2008 is fast approaching the number from the 2004 election cycle. The total number of lobbyist-fundraisers for the entire 2004 cycles was 136. As of today, based on the best data available (many campaigns have not been forthcoming with information on their fundraisers – Rudy Giuliani’s office, for example, has not responded to our requests for a list of his bundlers) there are already 92 federal lobbyists fundraising for presidential candidates. 

With more than a year left in the 2008 season, there is reason to believe many more lobbyists will stake a claim on a candidate and bundle contributions to a campaign.  So far, fewer than 30 percent of 2004 lobbyist-fundraisers have shown up on the 2008 candidates’ lists of fundraisers; most are still sitting on the sidelines waiting for a front runner to emerge (many likely see fundraising for a loser as a bad investment ...).