JP Morgan Chase Yanks Mandatory Binding Arbitration Clause From Credit Card Contracts

In response to legal and political pressure, JP Morgan Chase is removing the mandatory binding arbitration clause from its credit card contracts. Customers will receive a new member agreement reflecting the change first quarter 2010.

The pro-consumer change comes the same day that a partial settlement was reached in a case accusing Chase and other credit card companies companies of unlawfully conspiring to insert industry-wide arbitration clauses into their contracts. Chase said they won’t be replacing the clause with any other similar language, like a class-action waiver.

Mandatory binding arbitration is a clause inserted into many consumer contracts that forces consumers to revoke their right to lawsuit in the event of a dispute. Instead the case gets sent to an arbitration firm, which the company itself pays. The Christian Science Monitor found that the top 10 most used arbitration firms only found in favor of consumer 1.6% of the time. It’s about time these kangaroo courts got shut down.

JPMorgan Pulls Arbitration Clause From Card Contracts [Bloomberg]
Case Accusing Chase, Others of Conspiring on Arbitration Clauses is Partially Settled [PR Newswire]
(Photo: Pascal Vuylsteker)

Comments

Edit Your Comment

  1. subtlefrog says:

    So – the Mayans were right about 2012 then. If the credit card companies are working to give us protections, then the world must be coming to an end, right? Or something MUST be going on…

  2. Loias supports harsher punishments against corporations says:

    Based on the article, sounds like maybe mandatory arbitrations are getting a lot of bad publicity and JP doesn’t want to be associated with it anyway.

  3. Kimaroo - 100% Pure Natural Kitteh says:

    Yay for the fighting kangaroo picture!!

    Also.. It seems like Chase is trying to look like a “good guy” in the eyes of the public… We shall see if this is ever the reality.

  4. ren1hoek says:

    I’ll tell you EXACTLY why they are doing this and, of course, it’s to JPMorgan Chase’s advantage:
    Binding Arbitration goes both ways. If you default on your credit card agreement, then they have to go to arbitration. If they win, then they have to file in state court to get a judgement. Now, they can bypass arbitration, and just sue you directly.
    And you thought JPMorgan was just trying to be nice? HA!

    • CompyPaq says:

      @ren1hoek: That’s what I was thinking. Also its good PR either way.

    • That's Consumer007 to you says:

      @ren1hoek: The new reality is still better than arbitration – that, as the consumerist covered quite often, meant consumers N E V E R got justice in a court of law in disputes where an agreement was present.

      Separately I think this stinky evil clauses as an end run around civil rights and the justice system just can’t hold water legally.

  5. Corydon says:

    Nice try Chase, but I’m still pulling my accounts out of your greedy, money-grubbing hands.

  6. Kimaroo - 100% Pure Natural Kitteh says:

    @pecan 3.14159265: NOooo!! WON’T SOMEONE THINK OF THE KANGAROOS?!!

  7. Coelacanth says:

    @pecan 3.14159265: You’re breaking the first and second rule.

  8. Coles_Law says:

    @econobiker: More customers use them?

  9. ducs says:

    I just got a letter from Chase with the new cardholder agreement, effective February 22, 2010.

    The arbitration section was removed.