JPMorgan Chase Drops Card Arbitration Clauses In Settlement
DOW JONES NEWSWIRES
JPMorgan Chase & Co. (JPM) agreed to drop arbitration clauses from its credit-
card agreements as it reached a tentative settlement of a suit that accused the
bank and other lenders of unlawfully conspiring to require cardholders to
resolve disputes out of court.
The lawsuit accused credit-card units of Chase, Bank of America Corp. (BAC),
Capital One Financial Corp. (COF), Citigroup Inc. (C), Discover Financial
Services (DFS), HSBC Holdings PLC (HSBA.LN, HBC) and others of violating
antitrust laws by secretly consulting each other numerous times with the aim of
requiring cardholders to arbitrate all disputes, plaintiff law firm Berger &
Montague PC said Friday.
The settlement is the latest setback for arbitration, whose biggest provider
has drawn congressional and regulatory ire because of New York financier J.
Michael Cline's stakes in both leading arbitrator National Arbitration Forum and
big debt collector Axiant LLC. In July, Minnesota's attorney general alleged the
NAF deceived consumers by not disclosing that potential conflict of interest.
A Chase spokesman said Friday the bank had stopped sending cases to
arbitration in July and has subsequently decided to remove the arbitration
clauses.
The settlement, if approved, would formalize those decisions, as Chase agreed
to drop its clause for at least 3 1/2 years starting in 2010, and to immediately
stop enforcing existing clauses. Chase further agreed not to "contract, combine
or conspire" with any other credit-card company concerning arbitration,"
according to the statement from Berger & Montague, which is based in
Philadelphia. Chase, which denied any wrongdoing, will also make a payment
toward attorneys' fees and costs.
In exchange, the plaintiffs will release Chase from any liability stemming
from the insertion of its arbitration clause into its cardholder documents, but
not from claims stemming from actual arbitration.
Shares of JPMorgan were recently up 0.2% to $42.62. The stock is up 35% this
year.
-By Jay Miller, Dow Jones Newswires; 212-416-2355; jay.miller@dowjones.com
("JPMorgan Chase Drops Card Arbitration Clauses In Settlement," at 3:08 p.m.
EST Friday, misstated the connection between the National Arbitration Forum and
J. Michael Cline. A correct version follows.)
DOW JONES NEWSWIRES
JPMorgan Chase & Co. (JPM) agreed to drop arbitration clauses from its credit-
card agreements as it reached a tentative settlement of a suit that accused the
bank and other lenders of unlawfully conspiring to require cardholders to
resolve disputes out of court.
The lawsuit accused credit-card units of Chase, Bank of America Corp. (BAC),
Capital One Financial Corp. (COF), Citigroup Inc. (C), Discover Financial
Services (DFS), HSBC Holdings PLC (HSBA.LN, HBC) and others of violating
antitrust laws by secretly consulting each other numerous times with the aim of
requiring cardholders to arbitrate all disputes, plaintiff law firm Berger &
Montague PC said Friday.
The settlement is the latest setback for arbitration, whose biggest provider
has drawn congressional and regulatory ire. The National Arbitration Forum
ceased consumer-debt arbitrations several months ago as part of a settlement
with the Minnesota attorney general. Minnesota had previously inquired whether
the group had a relationship with J. Michael Cline's private-equity firm, an
investor in a service provider to NAF.
A Chase spokesman said Friday the bank had stopped sending cases to
arbitration in July and has subsequently decided to remove the arbitration
clauses.
The settlement, if approved, would formalize those decisions, as Chase agreed
to drop its clause for at least 3 1/2 years starting in 2010, and to immediately
stop enforcing existing clauses. Chase further agreed not to "contract, combine
or conspire" with any other credit-card company concerning arbitration,"
according to the statement from Berger & Montague, which is based in
Philadelphia. Chase, which denied any wrongdoing, will also make a payment
toward attorneys' fees and costs.
In exchange, the plaintiffs will release Chase from any liability stemming
from the insertion of its arbitration clause into its cardholder documents, but
not from claims stemming from actual arbitration.
Shares of JPMorgan were recently up 0.2% to $42.62. The stock is up 35% this
year.
-By Jay Miller, Dow Jones Newswires; 212-416-2355; jay.miller@dowjones.com
(END) Dow Jones Newswires
11-20-091523ET
Copyright (c) 2009 Dow Jones & Company, Inc.
|