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.
Yikes.
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. J.P. Morgan 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 Haji (@hajinatrix) May 30, 2019
Mail it to:
Chase
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.
CarolynB says
I read a story yesterday that Chase could force $150 fee instead of $95 on 100,000 customers. They would make $15,000,000. If you can’t have a class action lawsuit-which is what this is all about. I have also read that if you “opt out” they will take your points and shut you down.
A Journey to FI says
Hey Jim, thanks for this information and for facilitating the template. I know you mentioned this but could you speculate as to why Chase decided to do this (even though others might have been doing it already) and impact to cardholders, more specifically, travel hackers in terms of chances they will use the rejection letter to reserve the right to grant credit card applications in the future. Thanks.
Carl says
B4 sending opt out form” possably get notarized copy and sending by return receipt so if there’s a discrepancy & you end up going the distanced your coverd in multiple direction’s i would think.
Ps.if this was helpful plz let me know.
Thanks
ADG says
Well Jim Wang, this is the 3rd page on the web about Chase Arbitration Opt OUT notice which you all are posting the WRONG info about the DATES, as I see nothing about 8/9/2019 or 8/10/2019 and other dates these people have posted as NEWS. I have two notices sent from CHASE sitting in front of me, right here. And it seems everyone who has made a post on the web about this, including you, are INCORRECT by posting the wrong DATES on the web. Chase has sent me two notices, on the same day, for Disney Rewards and about the Merger, and the ARBITRATION, and it says, and I will quote some of the items from the pages they mailed to me.
” …..YOU CAN REJECT THE BINDING ARBITRATION AGREEMENT. YOU MUST MAIL YOUR REJECTION TO US BY 8/22/2019. PLEASE SEE THE END OF THIS NOTICE FOR INSTRUCTIONS.
Details on the changes to your account, effective 8/23/2019.”
on the backside it says….
“Can I reject this agreement to arbitrate? Yes. You have the right to reject this agreement if you notify us no later than 8/22/2019. You must do so in writing by stating you reject this agreement to arbitrate and include your name, account number, address and personal signature. Your notice must be mailed to us at P.O. Box 15298, Wilmington, DE 19850-5298. Rejection notices sent to any other address, or sent by electronic mail, or communicated orally, will not be accepted or effective.” ….
Reader of online agreements says
Are you sure this is current news? I went to my account online and opened the terms of service, “Last updated on 08/21/2016” and binding arbitration is already in effect. Pasted below (their all caps, not mine):
12. Binding ArbitrationYOU HEREBY AGREE THAT ANY DISPUTE, CLAIM OR CONTROVERSY ARISING NOW ORIN THE FUTURE UNDER OR RELATING IN ANY WAY TO THIS AGREEMENT, OR TO THEONLINE SERVICE (“CLAIM”), REGARDLESS OF THE NATURE OF THE CAUSE(S) OFACTION ASSERTED (INCLUDING CLAIMS FOR INJUNCTIVE, DECLARATORY, OREQUITABLE RELIEF), SHALL BE RESOLVED BY BINDING ARBITRATION. CLAIMSSUBJECT TO ARBITRATION INCLUDE CLAIMS THAT ARE MADE AS COUNTERCLAIMS,CROSS CLAIMS, THIRD PARTY CLAIMS, INTERPLEADERS, OR OTHERWISE.ARBITRATION REPLACES THE RIGHT TO GO TO COURT, AND YOU THEREFORE AGREETO WAIVE ANY RIGHT THAT YOU OR WE MIGHT OTHERWISE HAVE HAD TO A JURYTRIAL OR THE OPPORTUNITY TO LITIGATE ANY CLAIMS IN COURT BEFORE EITHER AJUDGE OR JURY. YOU FURTHER AGREE THAT YOU WILL NOT BE ABLE TO BRING ACLASS ACTION OR OTHER REPRESENTATIVE ACTION (SUCH AS AN ACTION IN THEFORM OF A PRIVATE ATTORNEY GENERAL) TO LITIGATE ANY CLAIMS IN COURTBEFORE EITHER A JUDGE OR JURY; NOR WILL YOU BE ABLE TO PARTICIPATE AS ACLASS MEMBER IN A CLASS ACTION OR OTHER REPRESENTATIVE ACTION INARBITRATION OR IN COURT BEFORE EITHER A JUDGE OR JURY. IF THE PRECEDINGSENTENCE IS NOT ENFORCED FOR ANY REASON, THEN YOU AGREE THAT IN SUCHCASE ANY CLASS DISPUTE WILL NOT BE RESOLVED THROUGH ARBITRATION.This binding arbitration provision applies to any and all Claims that you have against us, ourparent, subsidiaries, affiliates, licensees, predecessors, successors, assigns, and against all oftheir respective employees, agents, or assigns, or that we have against you; it also includes anyand all Claims regarding the applicability of this arbitration clause or the validity of the Agreement,in whole or in part. It is made pursuant to a transaction involving interstate commerce, and shall begoverned by the Federal Arbitration Act, 9 U.S.C. sections 1-16, as it may be amended.The party filing a Claim(s) in arbitration must file its Claim(s) before JAMS or the AmericanArbitration Association under the rules of such arbitration administrator in effect at the time theClaim(s) was filed. Rules and forms may be obtained from and Claims made may be filed withJAMS (800.352.5267 or jamsadr.com) or the American Arbitration Association (800-778-7879, orwww.adr.org). Arbitration hearings shall be held within the federal judicial district that include youraddress at the time the Claim(s) is filed, or at some other place to which you and we agree inwriting. Judgment upon any arbitration award may be entered in any court having jurisdiction.This Arbitration Agreement shall survive: (i) termination or changes in the Agreement, and the relationship between you and us concerning the Agreement; and (ii) the bankruptcy of any party or any similar proceeding initiated by you or on your behalf. If any portion of this Arbitration provision is deemed invalid or unenforceable, the remaining portions shall nevertheless remain in force.
Also, regarding opting out and still being able to use their services — I don’t think so. Clause 2, emphasis *** added:
2. Agreement; Online Service — When you use or access, or permit any other person(s) or entity to use or access the Online Service, or download or use any Software, you agree to the terms and conditions of this Agreement. We may amend or change this Agreement (including applicable fees and service charges) from time to time, in our sole discretion, by sending you written notice by electronic mail or by regular mail or by posting the updated terms on the sites within the Online Service (the”Site(s)”). Please access and review this Agreement regularly. ***If you find the Agreement unacceptable to you at any time, please discontinue your use of the Online Service.*** Your use of the Online Service after we have made such changes available will be considered your agreement to the change.
I think this ship has already sailed, unless it has taken them 3 years to extend this version of their contract to all their customers. My suggestion is that people with Chase accounts log in and find out what the terms of their own agreements are now, and if questions, call customer service.
Mat says
I read a story yesterday that Chase could force $150 fee instead of $95 on 100,000 customers. They would make $15,000,000. If you can’t have a class action lawsuit-which is what this is all about. I have also read that if you “opt out” they will take your points and shut you down.
Where did you read this? Can you provide a source?