There are so many credit cards on the market and so much information circulating about which card to choose that it is easy to be overwhelmed. What should you pay attention to, cash back perks or interest fees? What benefits are best for you in the long run? What happens if you fail to pay and your credit suffers? These are worthwhile questions. Here’s a legal aspect of card ownership that you likely haven’t considered: arbitration clauses.
What is an Arbitration Clause?
An arbitration clause is part of the contract you sign when you get a new credit card. This clause states that you won’t go to court should there be an issue with the card. Instead, you’ll use an arbitrator, a neutral party whose job is to listen to both sides of the situation. The mediator then issues a decision based on the facts of the case. In these circumstances, no jury is involved. It’s also unlikely that you’ll be able to appeal the decision. As the consumer, you’ll also lose certain protections and rights, including the right to join any class-action claims.
Does an Arbitration Clause affect My Rights in Any Way?
According to experts, it’s best to avoid arbitration clauses due to the restrictions on the rights mentioned above, and lack of appeals. When an arbitration process is initiated using a mediator, the consumer tends to lose more than they win. At least, that’s what’s indicated by a study of the mediation process, published through the Consumer Financial Protection Bureau (CFPB).
Recent Changes in Credit Card Laws that Could Affect Your Rights
The CFPB used to have a rule which regulated the arbitration clauses that a company could include. Recently, Congress repealed those regulations. The repeal means that you’re responsible, as the consumer, to avoid arbitration clauses by thoroughly reading any contracts and terms before you sign for your card.
The CFPB studied thirty issuers of credit cards. These covered ninety-nine percent of consumer cards issued in the United States. Of these thirty cards, only nine lacked a clause for forced arbitration. Some of the biggest companies included on the list were Capital One, Bank of America, and Chase.
Of the remaining companies, twelve allow their customers to reject a forced arbitration clause by submitting an opt-out letter. Among these companies are Discover, Citibank, and American Express. To opt out, the consumer has to send the company a message within a specific time period. Usually, this window is between 30 and 90 days following the issuance of the card.
If you did not agree to arbitration and are currently dealing with credit issues, securing legal representation can be to your benefit. Heather Benveniste of Benveniste Law Offices can represent you in the court of law while negotiating most favorable debt repayment terms. We understand the urgency of the matter and will ensure that the necessary paperwork is filed in a timely matter and that you are up to date on the case every step of the way. Contact us today at 1-800-497-5358 for a free case evaluation.