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WASHINGTON – JPMorgan Chase is attempting to require its credit card issuing clients to resort to private arbitration to resolve disputes – even if they involve an old account – by reintroducing the provisions that it had abandoned ten years ago.
"With arbitration, you can not go to court, make a jury trial, or bring a class action for your dispute with us," the bank said in notifications sent to customers.
The change, affecting approximately 47 million accounts, including Chase's popular Sapphire cards, reflects a broader effort by Wall Street corporations to prevent customers and employees from engaging in class action lawsuits that could result in settlements. important and bad publicity. Unlike court cases, arbitration cases leave no trace of public records and can not be brought by groups of injured clients.
In order to prevent the new arbitration agreement from taking effect, customers must oppose this in writing by 7 August at the latest, in accordance with the notifications. Clients could still sue in a small claims court.
Patricia Wexler, a spokeswoman for JPMorgan, said the change would affect "almost all" of its credit card issuing customers, with the exception of some service members and AARP cardholders. She stated that arbitration was already a "standard practice" for JPMorgan's consumer banking and auto loan business.
"The data shows that arbitration is often faster, cheaper and delivers better results for our clients," she said.
JPMorgan – the largest bank in the country – is far from the only one to make greater use of arbitration clauses. Seventy-two percent of banks used such clauses in 2016, up from 59% in 2013, according to a report from the Pew Charitable Trusts.
The notifications indicated that the arbitration agreement would apply not only to the customer's current accounts, but also to "all claims or disputes between you and us", including "any previous account".
The policy change goes back the time in another way by bringing back the type of arbitration clauses that the bank and others have agreed to temporarily remove in 2009 as part of an appeal. collective. The bank agreed to remove these provisions for a period of three and a half years, starting in 2010, to settle a lawsuit whereby the big banks would work together to bring customers to arbitration.
Arbitration provisions once seemed unlikely to make their return. In 2016, at the end of the Obama administration, the Office of Consumer Financial Protection issued rules prohibiting the inclusion of mandatory arbitration agreements for financial products, including credit cards, because it believed that such provisions deprived consumer groups of their time in court.
But the following year, President Trump signed a congressional resolution that overturned those rules. The Office of the Controller of Money, JPMorgan Chase's main federal regulator, called it a "win for consumers and small and medium-sized banks", which would help prevent "expensive frivolous lawsuits".
This change has also benefited the country's largest financial institutions. JPMorgan President Jamie Dimon and leaders of six other major banks were invited to a congressional hearing in April to find out if their institutions were allowing their clients to sue. Dimon said the bank's agreements allowed some clients to go to the small claims court. When in a hurry, he added, "We prefer arbitration."
In the past, class actions against big banks have helped push them to make changes that help consumers. In 2012, for example, JPMorgan agreed to pay $ 110 million to settle a class action regarding its overdraft collection procedures. That's among more than a dozen major banks sued by their clients for having reorganized debits from their accounts to maximize the possibility that accounts are overdrafted, which would generate more fees.
According to the new rules of the bank, such a case would be almost impossible. Every customer with a problem should solve the problem alone, in private, with the bank.
JPMorgan, which has reported in its annual report that it has 99 million open credit and debit card accounts, has not officially announced the change. But politicians and customers have taken note.
Representative Katie Porter, a California Democrat sitting on the House's Financial Services Committee, tweeted a warning to Chase cardholders on Monday, urging them to withdraw from the new deal. "It's wrong," she writes.
Sara Haji, a San Francisco lawyer with a Chase card, contacted her friends and family to warn them about the change. She then tweeted a template that Chase cardholders could use to reject the arbitration agreement.
In an interview on Tuesday, she stated that she would not normally have paid much attention to an email like the one she had received from Chase on May 29th. But after noticing the word "ARBITRATION" – in all capital letters – she read the complete agreement. and left alarmed.
She said she was concerned that arbitration too often favors the interests of society. Customers end up "on forums where they do not have identical rules of evidence and no right of appeal," she said.
Ms. Haji also said she was surprised at the difficulty with which the bank managed to convince customers who wish to refuse the agreement. Customers must send a letter to the bank with their account numbers, addresses and handwritten signatures.
She said she warned her family: "If you do not sign, it does not matter."
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