A Florida federal court has joined a number of other courts around the U.S. which have ruled that the National Arbitration Council (NAC) operates a rogue arbitration "service" for credit cardholders to try and extinguish debt through an unauthorized arbitration process.

The scheme is called a "mailbox arbitration" where a consumer uses the NAC or some other organization, which is not an authorized arbitrator under the credit card agreement, to erase credit card debt. The NAC has apparently sent out hundreds of "awards" claiming that the consumer has won a dispute and that the time to appeal had past. This is called a "mailbox arbitration" since the credit card companies claim that NAC is an unknown and unauthorized entity and that they never learn of a dispute until there is an adverse "award."

The US District Court for the Middle District of Florida issued a decision in Citibank v. National Arbitration Council finding that the NAC had tortiously interfered and violated unfair trade practice act. This follows a Tennessee court's similar ruling in Amsouth v. Soltis. Other known decisions include MBNA v. Bodalia (Alabama) and MBNA v. Terry (Ohio).

A telling quote from the Citibank case:

"Though NAC and Morgan's [sole officer of NAC] response to Chase and Citibank's motions for summary judgment illustrates their immense distaste for the credit card industry in the United States (in essence blaming it for various and sundry financial ills which have plagued this country throughout history), that ill will does not provide a license for NAC and Morgan to solicit Chase and Citibank cardholders and then dupe them into believing their debts have been expunged via a summary arbitration 'proceeding' that is nowhere authorized in any agreement between those entities and their customers..."

We could not find a website for National Arbitration Council however it is listed as a "credit card professional" on CardWeb. At least one other blogger has discussed NAC and credit card arbitrations (in a pro-consumer light).

Good luck, however, to the credit card companies which will likely try to collect fees and damages. According to the Florida corporations website, the "National Arbitration Council" was administratively dissolved for failing to file an annual report on September 15, 2006. See the details here.