Credit Card Companies Adjusting Arbitration Clauses in Anticipation of New CFPB Rules
Thursday, December, 19, 2013
Mandatory arbitration clauses in credit card agreements have long been a secret bomb waiting to go off. Consumers who believe they have reason to sue their credit card lender for damages have discovered to their amazement that they cannot actually sue, as they agreed to waive their right to litigate when they signed the agreement for their cards. They are instead forced into arbitration to resolve their disputes.
Many consumers felt that arbitration was not fair, as the arbitrators are chosen and paid by the credit card companies and the process is largely unregulated. Plus, there is no appeal possible in arbitration, making these decisions final.
Recently, the Consumer Financial Protection Bureau (CFPB) published findings after a year-long study that hint at new regulations to come and many credit card companies have already moved to change the agreement terms in their credit contracts to fall into line. American Express has already changed the language of their arbitration clauses and now allows consumers to opt out of arbitration if they do so in writing. Bank of America has dropped the mandatory arbitration clause from its credit card agreements altogether.
The CFPB will issue its revised regulations in early 2014, though no exact date has been established.