Chase Closes Account After Cardholder Rejects the Arbitration Provision

Chase, the biggest U.S. credit-card issuer, caused controversy back in 2019 by instituting a policy that forces credit-card customers to use arbitration instead of court to resolve payment disputes. Chase made the change in the terms of almost all credit card agreements, almost a decade after it agreed to drop the clause from contracts as part of a antitrust lawsuit settlement. Chase’s checking and savings accounts also include provisions for forced arbitration.

Chase customers were obviously worried about the change and worried if they would be able to keep their Chase accounts if they rejected the bank’s new arbitration clause. But the credit card issuer clarified that wouldn’t be the case.

“We will not close someone’s account because they’re opting out of arbitration,” said Trish Wexler, a spokeswoman for the bank. JPMorgan hasn’t directed call-center representatives to tell people their accounts would be shut, she said.

But it turns out that Chase has not kept its word, at least based on one report on Reddit today. One redditor says that he was “approved for the Chase Sapphire Preferred” and sent the required letter to opt-out of the arbitration clause. Chase’s responded by just closing his credit card account. He then called to reopen his account and agree to the arbitration clause, but was told that “the account could not be reactivated when it was closed due to rejecting the arbitration agreement.” The only way to get the card again would be to reapply. They couldn’t even provide any information about bonus eligibility, due to the closed account.

This seems very extreme by Chase, to just go ahead and close an account when the cardholders opts out of the arbitration clause. That’s even more worrying when this is done without any warning, or after the Bank has publicly said that this is not the case. This is the first time I hear about an account closure due to rejecting the arbitration clause, so I am not sure if this is a very rare case, or just business as usual for Chase.

Let me know if something similar has happened to you.

Chase Arbitration Agreement

Chase credit cards have the following in the terms:

Unless you timely reject the agreement to arbitrate, disputes with us may be resolved by binding arbitration. With arbitration, you cannot go to court, have a jury trial or initiate or participate in a class action for your dispute(s) with us. In arbitration, disputes are resolved by an arbitrator, not a judge or jury, and procedures are simpler and more limited than rules applicable in court.

You can see the full terms here, on page 15.