Consumer Law

More Courts are Now Deciding Credit Card Disputes


Once a dominant method of resolving credit card disputes between consumers and banks, mandatory arbitration of such cases could eventually be eliminated throughout the industry if Congress acts to prohibit forced resolution outside the courts.

After two major arbitration groups stopped handling credit card cases earlier this year, several major banks including the Bank of America decided to eliminate mandatory arbitration provisions from their credit card agreements. A growing number of other card issuers are likely to follow suit, according to the Wall Street Journal.

The newspaper’s lengthy article details how one of the arbitration groups may have been biased against consumers by its dual interest in both collections and consumer arbitration, through ownership of separate companies, and says a Congressional subcommittee concluded this past summer that the arbitration system is “ripe for abuse.”

Before credit card dispute arbitration can be entirely eliminated, however, Congress must act to prohibit it.

“I actually there is a fairly significant change afoot,” law professor Richard Reuben of the University of Missouri tells the newspaper. Banks and other issuers, he says, “don’t need the taint that comes with mandatory arbitration.”

Earlier coverage:

ABAJournal.com: “Big Bank Blinks; Is This the End for Mandatory Consumer Arbitration?”

ABAJournal.com: “Logistical Issues for Banks After AAA Pulls Out of Consumer Arbitration”

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