JP Morgan Chase Bank, the country's second largest bank announced recently that it is no longer requiring cardholders to seek relief through arbitration for credit card related disputes. Arbitration has long been under fire from critics who believe that it does not serve cardholders' best interests and are biased to credit card issuers.
A spokesman for the bank stated that its decision was a step in the right direction and that it reflects the company's commitment to constantly look out of the welfare of its valued customers. The company ceased sending card disputes to arbitration since July of this year.
People opposed to the practice of arbitration long believed that it has never been a fair venue for resolving credit card disputes. Consumers are also not aware that once they get into an agreement with their credit card issuer about resolving disputes through arbitration that they are effectively waiving their right to file legal action against credit companies in court. This recent move of JP Morgan Chase would now lead customers to seek legal relief in US justice courts where they would have a better chance for a fair trial.
Arbitration resolution decisions have been so far disappointing, registering a 94% rate of credit card issuers winning disputes over protesting cardholders.
Advocates of the legal technique argue that arbitration is actually faster and cheaper than filing cases in US courts. They added that the savings earned from lower costs could then be passed on by credit card companies to consumers.
On other related news, law firm Berger & Montague PC decided to drop its case against JP Morgan Chase and other companies for conspiring to force cardholders to agree to settle disputes via arbitration. JP Morgan Chase Bank stepped forward to have charges against it cleared by dropping the arbitration clause in contracts for 3-1/2 years starting 2010.
When asked if the bank's recent announcement regarding dropping arbitration settlement would also be good for 3-1/2 years, the bank declined to comment.
JP Morgan Chase refused to admit guilt to any wrongdoing on its part and the court would still have to decide if it would accept the bank's settlement proposal. The antitrust charges against the other defendants would still continue barring any attempts from the concerned parties for settlement.
Legal groups applauded JP Morgan Chase's decision to stop forcing cardholders to get into arbitration clauses saying that it is a victory for consumers who have for a long time been on the receiving end in arbitration cases, whose decisions they claim are mostly rigged in favour of card issuers.