How to Opt Out of the New Chase Binding Arbitration Rule
Chase has begun implementing a new binding arbitration rule for credit card users, first reported by Fast Company’s Cale Guthrie Weissman last week .
The change emailed to at least some customers with Chase Slate and Chase Sapphire Reserve credit cards (myself included) is as follows:
Weissman points out that Chase waived its binding arbitration agreement in 2009. This happened because almost every major bank in the country was accused of conspiracy against clients who wanted to sue the banks, forcing them to arbitrate; Chase, Capital One and Bank of America agreed to remove such items by 2013. Chase appears to be the first to revive this blast from the past.
It became clear from the correspondence that arbitration does not apply to clients protected by the Military Credit Act.
Customers who do not wish to participate in the arbitration must opt out by notifying Chase by August 7, 2019. Find the stamp because you will need to mail your request to:
When I asked Chase about the change, the company “politely declined” to comment.
Chase explained on Twitter that you should send a separate email for each account if you have more than one. The company also clarified confusion over whether it would close accounts if clients waived mandatory arbitration. For this reason, Chase will not close accounts.
How to find out your credit card arbitration policy
Dig a cardholder agreement, which was supposed to arrive in the mail, along with your credit card. If you have long since opted out of the paper version, please log into your account and review the Services or Benefits section to find your consent. You can also call your card issuer at the number on the back of your card and ask for a copy to be mailed to you.
In addition, you can view the CFPB Credit Card Contracts Database , which is likely to be updated by the end of 2018.
As of the end of 2017, the country’s 12 largest card issuers had allowed non-arbitration, and nine had no compulsory arbitration, including Capital One and Bank of America. Nine of the largest credit card issuers in the United States have requested non-waivers arbitration .
If it is possible to opt out, do so in writing.
Why watch this issue
In an ideal world, your financial institutions would never do you any harm, and you would never have the urge to sue them. But in this very real world, credit card problems can be problematic.
The CFPB began studying the impact of binding arbitration agreements shortly after the bureau was created and found that three out of four consumers did not know if their credit card agreement had an arbitration clause. Meanwhile, more than half of credit cards and banks have used these provisions to limit the number of complaints other than those subject to small claims court.
The Consumer Financial Protection Bureau tried to limit arbitration agreements back in 2017 with a proposed rule that would allow companies to include arbitration clauses in their terms of service if they still allowed consumers to join class actions against those companies. At the time, the CFPB pointed out, companies almost exclusively used arbitration agreements to block class actions.
Opponents of the rule (read: financial institutions) said that individual suits are better for the plaintiff. But in a 2017 survey , then-director Richard Cordray explained, “We found that the Isky group was getting more money back to more people. In five years of class action lawsuits, we received an average of $ 220 million paid to 6.8 million consumers a year. However, in the arbitration cases we studied, an average of 16 people collected less than $ 100,000 per year. ” Shortly thereafter, President Trump and Congress abolished the rule.
This is just one way to weaken the CFPB’s ability to protect consumers in the aftermath of a recession. In early 2018, CFPB’s plans to regulate payday lenders were canceled. Much of the financial data that the CFPB once tracked has faded into the background, and while the bureau continues to collect consumer complaints, it has taken far less action against financial institutions since the Trump administration came to power.
This post was originally posted on 6/4/19 and was updated on 6/18/19 with additional details about the opt-out process.