Stop Freaking Out Over Chase’s Binding Arbitration
Chase’s Binding Arbitration Isn’t A Big Deal
Disclaimer: I am not a lawyer, but I’m talking about lawyery things below very matter-of-factly. Don’t make legal decisions based on a travel hacking blog. I hate that I have to write this.
I wrote about this already in last weeks recap, but the travel blog-o-sphere is acting like Chase (or JPMCB for those that check their credit report) is executing cardholders in the streets. Since this is now such a hot topic for absolutely no reason, I wanted to write an article (vent) to put this all into perspective.
No Effect On Military
First and foremost: If you are active-duty military, your cards fall under the Military Lending Act‘s protections. One of these protections is prohibiting forced arbitration agreements. You do not have to care in the slightest, just keep deleting the JPMCB emails.
For those of you directed to this military travel hacking blog that are not active duty or under MLA protections, allow me to put this situation into perspective for you. Remember when you applied for your Chase card and read through the Terms and Conditions for about a half-hour to ensure you understood your legal rights when engaging in financial transactions with Chase? No, you don’t, because no one reads through the T&C’s (yes, I am baiting the one person reading this that did read the T&C’s to leave comments because site traffic is site traffic). You just sign away whatever rights Chase wants you to for the privilege of using their credit cards.
Well, guess what this binding arbitration change is? An alteration of the T&C’s that you didn’t care about before and likely only care about now because some lesser travel hacking blog wanted to capitalize on the ubiquitous victim mentality of this country.
What Even Is Arbitration?
But, I get it, you’ve now been woke to this term “binding arbitration” and suddenly care about your legal rights (although, if I were a betting man, I’d bet you still haven’t read through any of the other T&C sections to see what other rights exist that you don’t care about). So in a pinch, here’s what changed. If Chase does something to your account that you feel warrants legal action you are losing your ability to litigate (go to court, sue, etc.) or join up in a class-action lawsuit. Instead, you are now bound to settle said dispute with arbitration.
Arbitration is when a third party (paid by Chase, so impartiality is, I guess, questionable) sits down with you and Chase and hears your problem and hears Chase’s excuse and decides if Chase owes you any damages. It’s pretty much always final (can’t appeal), confidential (non-disclosures for everyone), and limited to actual damages (can’t cry mental anguish and expect Chase to pony up).
How Not Bad Is It?
Now, admittedly, this is a policy change skewed far in Chase’s favor, but in the military, we weight risk with two factors: severity and probability. On the severity side, I’d give it a moderate. You ARE losing legal rights, but it isn’t like Chase is saying they can take your firstborn and you have no legal recourse (that you know of, read those T&C’s yet?). But on the probability side, I’m firmly planting it at negligible. Have you ever brought Chase to court? Do you know anyone that’s ever brought Chase to court? Can you think of a situation in the cycle of making purchases, paying off said purchases, and receiving sweet reward points for said purchases, where Chase could do something that would warrant you bringing them to court? I can’t, not without gross negligence and a media firestorm to accompany poor business practices (kind of like adding a binding arbitration clause to T&C’s but a lot worse).
Oh, worried that you won’t be able to join a class action? Have you ever been a part of a class action? Know anyone part of a class action? You might, and if it were as big as a class action would be with a bank like Chase you’ll know the time and effort is rarely worth the payout after lawyer fees and split hundreds of thousands of ways.
What About Opting Out?
If you aren’t convinced by now that this is all blog hype and nothing to worry about, you may be thinking you should opt-out. Chase did provide an opt-out option via snail mail if you write to them before August 9th, 2019. If I were a betting man, I’d be willing to bet that failing to accept Chase’s new terms will provoke Chase to close your sweet, sweet reward cards. Doesn’t seem fair? Legal? Gosh, I bet you wish you read those T&C’s now. Buried within the Awards Program Agreement is this little nugget of catch-all “Your points don’t expire as long as your account is open, however, you’ll immediately lose all your points if your account status changes, or your account is closed, for any of the following reasons: […] we believe you may be unwilling or unable to pay your debts on time.” Gosh, what might lead them to believe you are unwilling or unable to pay your debts on time? I’ll take “literally anything” for $500, Alex.
At the end of the day, Chase has you by the balls and why shouldn’t they? They provide a sweet product that’s worth giving up some legal rights that you’ll never need to use or know exist unless the internet tells you. How do I know that? Because this opt-out clause is only for existing accounts and all new accounts will have it firmly nestled into the T&C’s. But guess what? You and everyone else will still get Chase cards and still not read the T&C’s because the products are still worth having and without an opt-out clause the blog-o-sphere won’t have any reason to incite panic for clicks.
Oh, and Amex has a 45 day from first purchase arbitration opt-out on all of their cards, and I’m willing to bet you’ve never done that either.