JP Morgan Chase recently notified its card customers that they won’t be able to sue the company if it breaks the law. But it’s possible most didn’t notice.
Last month, the nation’s largest bank notified its customers about “important changes” to their account terms. The only clear explanation of what that means is buried deep in the email.
The No. 6 out of eight bulleted notes says, “With arbitration, you cannot go to court, have a jury trial or initiate or participate in a class action for your dispute(s) with us.” And finally, the eighth tells them how they can prevent forfeiting their right to sue.
Card customers have until Aug. 7 to mail a written letter disputing the company’s effort to include the new individual arbitration agreement. If you’re unfamiliar with this term, read on to see why this may do more harm to customers and employees, and put more money in the corporation’s pockets…
Why this hurts consumers
A JP Morgan spokeswoman told the New York Times that “data shows that arbitration is often faster, less expensive with better outcomes” for its customers.[1]
However, mandatory arbitration tends to favor corporations over consumers, according to the Economic Policy Institute (EPI).[2] It’s a way for corporations to get around the courts. Consumers and employees of companies are far more likely to lose to big business in a private arbitration than in public courts.
Consumers and employees win 36.4 percent of cases in federal court, whereas they win only 21.4 percent of mandatory arbitration cases. And when consumers win, the earnings are far less in comparison.
Typically, consumers can win $176,426 in damages in federal court, EPI reports. But that drops significantly to $36,500 when settled through mandatory arbitration.
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How did this happen?
In 2017, President Trump signed a resolution into Congress that reversed Obama-era regulations, through the Consumer Financial Protection Bureau (CFPB), that allowed consumers to take financial product companies to court.[3]
The CFPB created regulations that protected consumers from getting the worst end of the bargain in legal dealings if companies broke the law.
“Signing up for a credit card or opening a bank account can often mean signing away your right to take the company to court if things go wrong,” said former CFPB Director Richard Cordray in a 2016 press release.[4] “Our proposal seeks comment on whether to ban this contract gotcha that effectively denies groups of consumers the right to seek justice and relief for wrongdoing.”
Well, that was then and this is now. But also in the past is a reminder for JP Morgan Chase of what happens when the laws are more in favor of consumers.
JP Morgan Chase’s history in court
Jamie Dimon, JP Morgan’s Chief Executive, has publicly stated in a congressional hearing in April that the company prefers arbitration, the New York Times reported.
Why would he say that?
We’re not completely sure, but in 2012, JP Morgan Chase settled a class action lawsuit where it needed to pay $110 million after charging its customers overdraft fees.[5] They, along with more than a dozen large financial institutions, were sued.
To avoid putting yourself in a situation where you cannot sue JP Morgan Chase for their wrong-doing, make sure to mail in your letter and be sure to include your signature. Many media outlets report the deadline is no later than Aug. 9. However, many customers are receiving notifications later. Follow the information sent to you.
See our example letter below:
Dispute letter example**
JP Morgan Chase Bank, N.A.
P.O. Box 15298
Wilmington, DE 19850-5298
June 25, 2019
To whom it may concern,
I customer, John Smith, REJECT the binding arbitration agreement changes. I reserve my right to pursue legal action against JP Morgan Chase Bank, N.A. in court — including class actions. Please note, I request confirmation this notification was received, and this information is noted to my account(s).
The following is my personal information as requested in your notification of changes:
[First and last name] [Street address] [City, State, Zip code] [Account number(s)]I am keeping a copy of this letter for my personal records.
Thank you,
[Your signature] [Name]Here’s a link to a PDF example: Dispute letter example and a downloadable Microsoft document available here: JP Morgan Chase letter
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Source:
[2] https://www.epi.org/publication/mandatory-arbitration-unfairly-tilts-the-legal-system/?utm_content=buffer76362&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
[3] https://www.occ.gov/static/enforcement-actions/ea2017-060.pdf
[4] https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-proposes-prohibiting-mandatory-arbitration-clauses-deny-groups-consumers-their-day-court/
[5] https://bucks.blogs.nytimes.com/2012/02/06/chase-agrees-to-settle-lawsuit-on-overdraft-fees/
