Henry Meier, Esq., The Law Firm of Henry C. Meier
If your credit union has already implemented an arbitration clause, you may think that you have done all you can to protect yourself against class-action lawsuits. Even as NCUA debates who can exercise what powers and the CFPB goes into a regulatory-induced coma, it is essential to remember that your credit union still faces this legal threat. But is your confidence justified?
If your credit union has an arbitration clause, it still has the burden of proving that your arbitration clause was agreed to by the members seeking to sue you. One of the most common ways attorneys try to get around arbitration clauses is to claim that the procedures used by the credit union did not give members adequate notice of what they were agreeing to or provide a mechanism to reject the arbitration. Typically, the way a credit union would respond to this claim would be to submit an affidavit from a credit union employee, hopefully with accompanying material and screenshots detailing the steps that were taken to notify members of the arbitration clause.
Under the federal rules of evidence, “a witness may testify to a matter only if evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter.” Who at your credit union satisfies this standard when it comes to testifying about how you implemented the credit union’s arbitration clause?
That is the nub of an issue recently addressed in Moshe Borukh v. Experian Info. Sols., Inc., 2025 U.S. Dist. The United States District Court for the Eastern District of New York provided the latest example of how this issue comes up in the context of arbitration.
The plaintiff in this case brought a lawsuit against Experian, alleging violations of the Fair Credit Reporting Act. Experian moved to compel arbitration pursuant to language contained in an online click agreement, which the member concedes he agreed to. The plaintiff argued that the only evidence submitted by Experian in support of compelling arbitration was inadmissible.
According to the plaintiff, the Declaration of Dan Smith, who holds the title of Director of Project Operations, is not based on his personal knowledge as required by federal procedure. Crucially, however, the court held that since the declarant was generally responsible for overseeing the arbitration integration process, he could familiarize himself with the credit union’s specific records and testify to the procedures used to document the plaintiff’s consent. Remember, however, that even though its vice president was confident to testify, Experian was only successful because it had adequate documentation that could be reviewed and testified to.
Any credit union that decides to integrate an arbitration provision into its account agreement must not only be concerned with drafting the appropriate language but also ensuring that it can document how members were notified of the arbitration clause and how your credit union documented the member’s acceptance of the changed terms. As part of this process, working with legal counsel to ensure that it is familiar with your jurisdiction’s approach to deciding who is competent to testify on issues relating to arbitration. These issues are literally being litigated across the country, and not all states are committed to arbitration.
Last but certainly not least, archive the material needed to support what you want your employee testifying to. For example, if you sent out an email containing information about the arbitration clause, then you should have a copy of the email and material. This may sound obvious, but one of the most basic mistakes businesses make when implementing arbitration clauses is to not archive evidence related to member approval procedures. The burden is on the party seeking to compel arbitration to prove that it has been agreed to.