Forced arbitration is a legal process that keeps a lawsuit from going to the public courts with juries. Instead, the case is handled privately by a disinterested third party. Unlike public court, any information from the case is not released to the public. These cases usually rule in favor of the employer or company, or in this circumstance, JPMorgan Chase.
JPMorgan Chase is trying to reintroduce a forced arbitration clause they got rid of ten years ago. They agreed to temporarily drop the clause after a class-action lawsuit in 2009 that argued large banks work together to force customers into arbitration. Chase continued with the lift on the clause into 2016 because the Consumer Financial Protection Bureau (CFPB) issued rules that prohibited mandatory arbitration for financial products, including credit cards. In a way, CFPB agreed with the 2009 ruling: consumers deserve their day in court. But in 2017, President Trump overturned the rules. Now, 72% of banks use arbitration clauses. According to Patricia Wexler, a JPMorgan spokesperson, arbitration is already “standard practice” for their consumer banking and auto loan business, and so they want to extend the policy to their credit card accounts.
Even though the rule overturn was spun to primarily protect small and medium banks, large banks benefited just as much. Conveniently for Chase, the world’s largest bank, they get to avoid class action lawsuits that push changes in favor of customers, give large settlements, or bring bad publicity to the bank. Instead, any issues a customer has will be presented in private—in a forum of Chase’s choosing—and will probably not make any change.
Even though there was no formal announcement from the bank, 47 million accounts will be affected. The exclusions are certain service members and holders of its AARP card. This agreement would not only apply to current accounts, but all claims or disputes between the bank and their customer. This extends to any prior accounts as well.
In order to be able to take action in small claims court, customers must mail in an objection in writing by Aug. 7. The letter must contain the customer’s account numbers, addresses, and most importantly, handwritten signatures.