Did you hear the news that Chase has added a forced arbitration clause to some of their credit cards?
I first read about it in a Fast Company article by Cale Weissman and the first group to get this notification were Chase Slate credit card holders:
According to Chase, the new agreement includes a new section entitled “Binding Arbitration.” The section goes as follows:
This arbitration agreement provides that all disputes between you and Chase must be resolved by BINDING ARBITRATION whenever you or we choose to submit or refer a dispute to arbitration. By accepting this arbitration agreement you GIVE UP YOUR RIGHT TO GO TO COURT (except for matters that may be taken to a small claims court). Arbitration will proceed on an INDIVIDUAL BASIS, so class actions and similar proceedings will NOT be available to you.
According to the New York Times, it's not just the Slate card but it also includes others like the entire line of Sapphire cards. According to a spokesperson, it'll basically include all Chase cards except for military and AARP cardholders.
What is Binding Arbitration?
If you have a dispute with another person or a company and you can't work it out yourselves, sometimes your only recourse is in court. Binding arbitration is a step below the legal system and is usually faster, cheaper, less time consuming, and less formal. Both sides agree to submit their dispute to an arbitrator who will make a final and binding decision.
Companies like arbitration because it's faster and cheaper. According to a report by Pew Charitable Trusts, 72% of banks use a clause like this. Chase is hardly alone.
Consumers don't like it because you give up the right to go to court, unless it's small claims court. While it's very rare that you'd ever need to sue your credit card company, it's also very rare that a bank would open bank accounts without the knowledge of its customers. So never say never.
How to Opt Out of Chase's Binding Arbitration
It turns out that you can opt out of this clause by mail before August 7th, 2019.
Mail a letter stating “that you reject this agreement to arbitrate and include your name, account number, address and personal signature.”
Here's a template letter you can use. It's courtesy of Sara, who appears to be affiliated with Berkeley Law in some capacity if Twitter bios are to be believed, but the template checks all the boxes.
Sure thing — hopefully this works: https://t.co/3floPsDDvP
— Sara (@hajinatrix) May 30, 2019
Mail it to:
P.O. Box 15298
Wilmington, DE 19850-5298
Is This Necessary?
Personally, I don't see binding arbitration as this “end of the world” horrible thing. If you can opt out, it seems benign.
Forcing it as a requirement to use the card would seem a bit heavy handed but that doesn't appear to be the case here. You can opt out of the clause and keep the card. Plus, Chase is hardly alone in doing this and it appears more like an industry practice than anything else.
That said, you never know what will happen in the future and if all it takes is a simple letter, I think it's important to get the clause removed from your agreement.