Credit card arbitration lawsuit resurrected
Credit card issuers will still face charges related to their agreements with cardholders.
The Wall Street Journal reported that a New York appeals court on Friday reinstated a 2005 lawsuit charging some of the leading U.S. credit card issuers with breaking the law. The issuers allegedly forced credit card users to sign away their right to bring complaints to court by including arbitration-only clauses in cardholder contracts.
Previously, a lower court had tossed the suit “on the grounds that the plaintiffs hadn’t been injured and therefore had no right to bring the lawsuit,” the Journal says.
The U.S. Court of Appeals for the Second Circuit didn’t see it that way, saying the charges represent “present, ongoing harms that continue to affect the credit market as long as consumer choice and the quality of credit services offered are artificially suppressed,” and sending the case back to the lower court.
Among the credit card issuers named in the suit were major lenders Bank of America, Capital One, J.P. Morgan Chase, Discover, Citi, Washington Mutual’s Providian and HSBC. The complaint alleged that the issuers violated antitrust rules by holding secret meetings where they conspired to deny cardholders the right to take disputes to court.
What will this mean for consumers who signed the agreements? Cardholders, stay tuned.