The Weekly Sedition

Tuesday, 12 May 2009

Loan Ruling Hurts Consumers (Letter to the Editor)

Filed under: Uncategorized — Tags: , , , , , — weeklysedition @ 1:50 PM

Loan Ruling Hurts Consumers
by Bill Koehler

THE ARTICLE “Arbitration Clause Illegal” [1] said that this is a victory for the consumer. What total nonsense.

How does taking away the consumer’s as well as the lender’s freedom benefit anyone? The court said this was against public policy.

What does that mean? Basically, the lawyers don’t want to be prohibited from stealing.

Who is the real “winner” in all this? When legitimate lenders are regulated out of existence there will always be those who will fill the void just as there always are when any legitimate activity is prohibited. The real victory is for the loan sharks. They don’t need arbitration. they simply send a modern day Al Capone to collect — before he got in the booze business he handled collections. . . .

BILL KOEHLER Albuquerque

The Reverend Bill Koehler is New Mexico’s Consumer Advocate and the Press Secretary of the Libertarian Party of New Mexico

NOTES

Friday, May 01, 2009

Arbitration Clause Is ‘Illegal’
By Joline Gutierrez Krueger

Score another one for the consumer.

The state Supreme Court this week struck down a payday loan company’s “self-serving” arbitration provision.

Such a provision, found in many consumer contracts, took away a consumer’s right to sue the company while the company retained its own rights to all legal remedies.

“A one-sided mandatory arbitration clause is now unenforceable and illegal in New Mexico,” Attorney General Gary King said Thursday, a day after the state’s highest court handed down its decision against World Finance Corp. of New Mexico in favor of Las Vegas, N.M., social worker Laura Cordova.

The case stems from a lawsuit Cordova filed in September 2006 against World Finance that accused the short-term lender of unreasonable debt collection and violating the Unfair Practices Act.

Cordova said the company besieged her for nearly three years with increasingly threatening, demanding phone calls to her office, home, relatives and boss when she couldn’t pay back her loans, at a 110 percent annual interest rate, after she fell ill.

The company challenged her right to a jury trial by invoking a clause in her contract that forced her into mandatory arbitration, a private dispute resolution system that bypasses the courts, overseen by an entity of the company’s choosing.

Such clauses are prevalent in contracts consumers often enter into when they sign up for a credit card, cell phone, loans, medical care or a job.

Cordova opposed World Finance’s effort to forced arbitration, and, in January 2007, a state District Court judge in Las Vegas agreed. The state Court of Appeals also sided with Cordova in June 2007.

World Finance appealed to the state Supreme Court.

Wednesday’s decision, written by Justice Charles Daniels, called World Finance’s arbitration clause one-sided, self-serving and therefore unenforceable.

The decision could ultimately effect a change in business practices statewide and possibly elsewhere, said Paul Bland, a lawyer with the Washington, D.C.-based Public Justice Foundation, who argued Cordova’s case before the state Supreme Court along with Albuquerque attorney Rob Treinen.

The state Attorney General’s Office and the AARP had also filed “friend of the court” briefs siding with Cordova.

Treinen said Cordova now has a chance to present her initial case against World Finance before average everyday citizens rather than an arbiter handpicked by the company she is suing.


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