Ten years ago, Chase was forced to withdraw the binding arbitration clauses in its credit card agreements as part of a settlement in a class-action suit (the company was accused of conspiring with other banks to force all credit-card customers to accept binding arbitration) (one of the things binding arbitration does is deprive you of your right to join class-action suits!). Last May, the company stealthily reintroduced the clauses, and gave customers until August 7 to notify the company in writing if they do not agree to binding arbitration. You have ONE MONTH LEFT to opt out.
Binding arbitration is a system of private law in which you surrender the rights that Congress gave you and resolve your disputes with massive, powerful companies by pleading your case in front of a contractor they hire (these contractors usually find in favor of the companies who are paying their bills, not the customers they’ve wronged.
To get a sense of why you should always opt out of binding arbitration, even though the companies make it very hard to do so (you have to print and sign a letter opting out and then mail it to them), consider yesterday’s news about T-Mobile, who were caught selling realtime access to its customers’ location to brokers who sold the information on to bounty hunters, debt collectors and even stalkers. T-Mobile says that its customers can’t form a class action suit against it, because they didn’t opt out of binding arbitration when they had the chance. There’s a real possibility that T-Mobile will get away with this incredibly sleazy, dangerous behavior, thanks to binding arbitration.
Opt out today by mailing a letter to Chase at P.O. Box 15298, Wilmington, DE 19850-5298; make sure the letter includes your name, account number, address, and your signature and the phrase “I reject this agreement to arbitrate.”
I mailed my opt-out to Chase in June and received confirmation in writing this week; coincidentally on the same day, the little credit-union that holds our mortgage sent me a notice telling me they were going to impose binding arbitration unless I sent them a written notice.
“Inserting a binding arbitration agreement in its contracts takes away our right to our day in court and ability to band together against a behemoth bank if Chase violates the law,” says Lauren Saunders, associate director for the National Consumer Law Center, an advocacy group.
She says the bank is counting on its customers overlooking the deadline and not opting out in time, essentially giving the bank a “get out of jail free card.”
Spokespeople for JP Morgan Chase didn’t respond to Consumer Reports’ emails requesting comment, but in the notice sent to customers the bank said that arbitrating disagreements is simpler than going to court.
Ted Rossman, a banking analyst with Bankrate.com, says arbitration is indeed generally faster and cheaper than litigation, but he agrees with advocates that arbitration typically benefits companies over consumers.
“The Consumer Finance Protection Bureau found that consumers won only 20 percent of the arbitration cases, and that even when they were victorious, consumers received only 57 cents for every dollar they claimed,” Rossman says.