Chase drops arbitration from card contracts

updated 4:14 p.m. ET Nov. 20, 2009

NEW YORK - JPMorgan Chase & Co. dropped a clause from its credit card contracts that required disputes with customers to be handled through binding arbitration.

The move opened the door for customers to potentially bring class-action and other lawsuits.

A spokesman for the New York-based bank's Chase Card Services Unit confirmed the change Friday, after a law firm that sued over the old policy announced a tentative settlement.

The spokesman, Paul Hartwick, said Chase decided to stop sending credit-card disputes to arbitration in July, and removed the arbitration clause. Bank of America took a similar step three months ago.

Banks have said arbitration was less costly for everyone than lawsuits. But consumer groups criticized the practice as tilted in favor of banks.

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