UPDATE 2-Minnesota AG sues credit card arbitration firm

(Adds comment from National Arbitration Forum)

NEW YORK, July 14 (Reuters) - The National Arbitration Forum, which provides arbitration services for consumer credit disputes, has hidden ties to the credit card industry, the Minnesota Attorney General claimed in a lawsuit on Tuesday.

The lawsuit alleges that the Forum, despite claims of being impartial, works against consumers by convincing credit card companies and other creditors to insert arbitration provisions into customer agreements that require it to decide the disputes.

“In fact, it has extensive ties to the collection industry (credit card industry) that it hides from the public,” Minnesota Attorney General Lori Swanson said in a statement.

In a statement, the NAF said: “Published studies and empirical data indicate that consumers prevail (with arbitration) at the same or better rate as they do in court. For debt collection matters in particular, lenders prevail 93.8 percent of the time in arbitration and over 96 percent of the time in court.”

The National Arbitration Forum, based in Minneapolis, offers arbitration and mediation services through recruitment, selection and management of more than 1,000 former judges and attorneys.

Reporting by Chelsea Emery; Editing by Richard Chang and Matt Daily