In Fleming v. Oliphant Financial, Plaintiff filed a class action against a debt collector. The creditor sought to move the dispute to individual arbitration and avoid a class action. The appellate court held that in order to enforce an arbitration provision in a credit card agreement, the creditor must provide evidence that the card holder actually received the agreement. If they never signed it or received it, they could not agree to it.
Based upon the alleged Cardmember agreement, the collector argued that the arbitrator should decide whether an agreement was reached, but until the existence of the agreement is established, there is no basis for going to an arbitrator.
The creditor also argued that the cardholder received statements that told them to "refer to your Cardmember Agreement for additional information about the terms of your Account." Parties are permitted to incorporate terms by reference, but the reference must be sufficiently clear and allow easy access to the terms. But, without first establishing what the Cardmember Agreement is, this reference is unclear.
The creditor probably could not establish what happened in connection with the original application because the account was transferred so many times.
What is the lesson? For creditor companies: keep your records and clearly refer and incorporate terms with specific reference to where they can be found on each statement. For everyone else: asks your representative to amend the Federal Arbitration Act to exempt form contracts that are not subject to negotiation.
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