If you’re a Chase cardholder and you got an email last week about changes to the terms of your account, don’t just toss it aside: One of those changes could involve a “binding arbitration” provision that limits your ability to sue the bank.
But you can protect your ability to sue if you opt out of the arbitration clause by Chase’s deadline this summer.
If you don’t opt out, binding arbitration means you’ll have to resolve disputes with Chase through arbitration — and you won’t be able to join any class action lawsuit against the bank.
How to opt out
Those covered by the Military Lending Act are not bound by the arbitration agreement and shouldn’t be required to opt out.
But if you aren’t covered by the MLA and you received a notice from Chase about changes to your account terms relating to binding arbitration, you can opt out by following the guidelines Chase provided. Make sure you review the notification you received from Chase — but based on the notice we saw, customers need to take the following steps:
How: Send a letter by mail to the following address:
P.O. Box 15298
Wilmington, DE 19850-5298
What: The letter must state that you reject the agreement to arbitrate. It also must include your name, account number, address and personal signature.
When: Check the fine print of the notification you received from Chase for the exact deadline. In the notice we saw, Chase said it must be notified by mail no later than Aug. 9, 2019. Some media reported that Chase must receive opt-out letters by Aug. 7 — another said the deadline is “within 60 days” of receiving Chase’s alert about the new rule.
Chase will not accept an opt-out request by phone, email, or any form of communication other than a physical letter.
If you’re looking for help drafting your letter to Chase, the blog Military Money Manual has a template you can reference.
Details of the arbitration provision
Chase’s arbitration clause means that cardholders must settle disputes they might have through private arbitration, in a forum of Chase’s choosing, rather than through a jury trial or other public court proceedings. This can prevent class action lawsuits that can be costly for the bank and in the past have led to changes in how banks have to do business.
Chase said the arbitration provision applies to around 47 million credit card accounts. A JPMorgan spokeswoman told the New York Times that means “nearly all” accounts except for certain AARP card accounts or those held by some members of the military.
Why is this happening now?
To understand why Chase brought about its arbitration provisions now, you need to look back a decade.
A 2009 class action suit against certain banks accused them of forcing customers into arbitration. As part of that suit’s settlement in 2010, Chase and other banks agreed to drop any such arbitration provisions for a period of about three and a half years.
When that period ended, the banks began bringing arbitration clauses back. According to a report by the Pew Charitable Trusts, nearly two-thirds of banks (72%) had such clause mandates in place by 2016, up from 59% in 2013.
In 2016 the Consumer Financial Protection Bureau stepped in and proposed rules barring mandatory arbitration clauses. But the Trump administration overturned those rules in 2017, just a few months after they took effect — clearing the way for Chase and other banks to bring back arbitration clauses.
Chase claims arbitration can be better for consumers as well as small and midsize banks. In a statement to the New York Times, a Chase spokeswoman said arbitration can have “better outcomes” for consumers.