Chase becomes first bank to drop arbitration clause

JP Morgan Chase became the first bank to drop its arbitration clause from its credit card contracts, so Chase credit card holders will have the right to go to court to dispute a problem with its credit card decisions.

This decision was part of a settlement of an antitrust lawsuit filed by Minnesota Attorney General Lori Swanson that involved the largest arbitration company, the National Arbitration Forum, in July. The Forum is no longer part of the process of consumer-debt arbitration, but the banks have not yet settled the suit. This move by Chase will likely encourage other banks to do the same thing.

While Bank of America became the first one to announce that it would no longer require credit card, bank account and auto loan customers to sign away their right to sue and force arbitration, it has not yet settled the existing lawsuit. Capital One Financial, HSBC Holdings and Discover Financial are among the other financial institutions named in the suit.