Chase to drop arbitration clauses in credit card debt agreements

11/23/2009

A major issuer of credit card debt accounts agreed to no longer include arbitration clauses in its credit card agreements.

J.P. Morgan Chase & Co. said it would stop putting the clauses in agreements after reaching a settlement regarding a class-action suit put forward by the law firm of Berger & Montague PC. The firm contends that credit card companies secretly worked together to get arbitration clauses in credit card agreements.

Rather than allow consumers to settle their disputes in court, arbitration clauses bring in a third party to settle claims, a practice some feel is not fair to card holders.

In fact, a settlement was reached this year between the Minnesota Attorney General's office and the National Arbitration Forum, which is the largest arbiter in the country. The suit alleged that the NAF misrepresented its impartiality in disputes by not disclosing certain financial ties it had with debt collection companies.

The law suit against the NAF was settled with the company agreeing to not take on any additional arbitration cases.

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