How to Avoid Mandatory Arbitration With Chase & Why You May Want To
Note: This is not legal advice. Please consult your own legal professional for information based on your own personal situation.
This is a guest post by Bethany Walsh. There is some good info in here and I can’t thank her enough for putting this together. Make sure you follow her on Twitter.
Update: There are reports on Facebook that people have been told that Chase would close their accounts if they object to this. If I find any reports of this I will add them here.
- Reddit comment that says Chase will shut down your accounts
- Reddit comments that are a mixed bag
- Comments in a DoC post go both ways
Chase has since come out and said they will not close people’s accounts for opting out.
Chase sent emails for at least three of my credit card accounts today about a few changes to the account terms. The changes will modify your existing cardmember agreement with Chase in a few ways that didn’t concern me until I saw that Chase was adding a mandatory arbitration clause.
The good news is that you have the right to reject this provision and you should (I’ll explain later). As per the notice, if you choose to reject the arbitration clause, you must notify Chase no later than 8/9/2019.
How to Reject the Arbitration Clause
You must do so in writing (no later than August 9, 2019) by stating that you reject this agreement to arbitrate and include:
- your name
- account number
- personal signature.
Your notice must be mailed to Chase at P.O. Box 15298, Wilmington, DE 19850-5298.
NOTE: Rejection notices sent to any other address, or sent by electronic mail or communicated orally, will not be accepted or effective.
Here are the instructions from the terms Chase sent out:
Can I (the customer) reject this agreement to arbitrate?
Yes. You have the right to reject this agreement to arbitrate if you notify us no later than . You must do so in writing by stating that you reject this agreement to arbitrate and include your name, account number, address and personal signature. Your notice must be mailed to us at . Rejection notices sent to any other address, or sent by electronic mail or communicated orally, will not be accepted or effective.
What is Arbitration?
Basically, mandatory arbitration means that members with a legal claim against the bank may not sue the bank in court, instead they may only pursue a legal action through arbitration. For anyone who doesn’t know, arbitration is an out of court, binding legal proceeding where a a person or group makes a binding decision that resolves the legal dispute.
Why is Arbitration Bad for Cardmembers?
Simply put, arbitration blocks a customer’s access to court and resolving a matter through a trial with a judge or jury. The major issue for me is that mandatory arbitration precludes you from taking part in a class action lawsuit and as we’ve seen in the past, class actions against large companies can be lucrative for customers.
Banks like arbitration for several reasons. First, the proceedings are private, so if they’ve done something wrong, there’s less publicity. Second, it’s much cheaper because each individual consumer would have to bring legal action against the bank and they’re generally not going to go to the trouble for a few bucks. However, if there’s a class action it’s not just a few bucks for one consumer, it’s a few bucks for each member of the class and that could be millions of people.
There are people that have commented that Chase will shut down your accounts for this. We did not see anything in the terms about this when posting the article. Some have said that they saw reports of people calling Chase to ask and they said they would close your accounts if you refuse. Chase has since refuted this on Twitter. Others have come out and said they have sent out these letters to other banks and had no issues.
I believe it is more speculation based on results in similar instances but some have also said that was explained in the terms in those instances. You may want to reach out to Chase yourself and see what they say. You will need to weigh the pros and cons and overall risk and make the final decision yourself.
While I realize that the mandatory arbitration clause is probably not going to affect you it’s probably worth taking the 10 minutes to send a rejection notice.