How to Find an Arbitration Clause in Your Credit Agreement

You’ve been sued for credit card debt. Before you panic, check your credit card agreement.

Many agreements contain an arbitration clause that can help you. You can use it to push your case out of court.

Finding and using this clause could save you from a courtroom appearance. You might even get the case dismissed entirely.

What Is an Arbitration Clause?

An arbitration clause is a contract section that changes how disputes get resolved. Instead of going to court, you and the creditor use arbitration.

Arbitration means a neutral third party decides your dispute. The arbitrator reviews evidence and makes a binding decision.

You agreed to this process when you signed up for your credit card. Most people never read these clauses until they face a lawsuit.

How to Locate Your Arbitration Clause

Finding your arbitration clause takes some detective work. Here’s how to track it down quickly.

Read the Fine Print Carefully

Credit card companies don’t advertise arbitration clauses. They bury them deep in multi-page agreements.

You need to read every section of your agreement. The clause is there, but it won’t be highlighted.

Search for Key Terms and Headers

Look for sections with these specific headers:

• Dispute Resolution
• Legal Disputes
• Legal Recourse Options
• Claims Resolution
• Arbitration

These sections typically contain the arbitration language you need.

Use the CFPB Database

The Consumer Financial Protection Bureau maintains a credit card agreement database. You can search for your specific card issuer.

Download your agreement as a PDF. Use the search function (Command+F or Control+F) to find “arbitration.”

If nothing appears, your agreement probably doesn’t include an arbitration clause.

Typical Arbitration Clause Example

Here’s language from the American Express Gold Card agreement:

“You or we may elect to resolve any claim by individual arbitration. Claims are decided by a neutral arbitrator. If arbitration is chosen by any party, neither you nor we will have the right to litigate that claim in court or have a jury trial on that claim.”

Your clause will contain similar language about resolving disputes outside court.

File a Motion to Compel Arbitration

Once you find your arbitration clause, you can use it strategically. Filing a Motion to Compel Arbitration pushes your case out of court.

The process works in your favor for several reasons.

How Arbitration Works

An arbitrator is an independent person who decides your dispute. Both parties present their case to this neutral decision-maker.

Courts can appoint arbitrators, or both parties can agree on one. Many arbitrators are retired judges or legal experts.

The arbitrator’s decision is legally binding. You typically cannot appeal to a court afterward.

Why Debt Collectors Often Drop Cases

Arbitration clauses usually require creditors to pay arbitration fees. These fees can exceed the debt amount itself.

Many debt collectors would rather dismiss the lawsuit than pay for arbitration. Filing your motion puts financial pressure on them.

Our partner Solo can help you prepare and file a Motion to Compel Arbitration. You can force collectors to either pay up or give up.

Better Results When You Initiate

Consumer-initiated arbitration cases show better outcomes. Debt collectors face real costs and often withdraw.

When you’re the one demanding arbitration, you control the strategy. You turn the clause into a defensive weapon.

Understanding Arbitration Disadvantages

Arbitration isn’t always favorable to consumers. You need to understand the drawbacks before choosing this path.

You Give Up Court Rights

Arbitration clauses eliminate your right to sue in court. You cannot have a jury trial or public hearing.

Court proceedings create public records and follow strict evidentiary rules. Arbitration is private and less formal.

You also cannot join class-action lawsuits against the credit card company.

The Process Favors Credit Card Companies

Credit card companies often select the arbitrator. The arbitrator doesn’t need legal training or judge experience.

Arbitrators don’t follow standard Rules of Evidence or Civil Procedure. They can ignore legal precedent entirely.

Many arbitrators depend on credit card companies for repeat business. You can see the conflict of interest.

Limited Appeal Options

Arbitrator decisions are final in most cases. You have very limited grounds to appeal.

If you disagree with the outcome, you’re generally stuck with it. Courts rarely overturn arbitration awards.

How Common Are Arbitration Clauses?

Arbitration clauses appear in most modern credit card agreements. You’ve probably agreed to several without realizing it.

Widespread Adoption by Banks

A Pew Charitable Trust analysis found dramatic increases in arbitration clauses. Usage jumped from 59% in 2013 to 72% in 2016.

As of 2022, finding a credit card without an arbitration clause is difficult. Major banks have embraced mandatory arbitration.

Banks Reintroducing Clauses

Some banks removed arbitration clauses but brought them back. Chase Bank eliminated its clause in 2009 as part of a class-action settlement.

Chase reintroduced mandatory arbitration in 2019 when the settlement expired. Other banks followed similar patterns.

Beyond Credit Cards

Arbitration clauses appear in many consumer agreements. Amazon, Netflix, Groupon, and Verizon all use them.

You’ll also find these clauses in:

• Auto loans and leases
• Investment accounts
• Student loans
• Employment contracts
• Nursing home agreements

Companies prefer arbitration because it limits their legal exposure.

Arbitration and Class-Action Lawsuits

Arbitration clauses effectively block class-action lawsuits. The Supreme Court has upheld this practice.

Supreme Court Ruling

In 2013, the Supreme Court ruled on mandatory arbitration clauses. Companies can use arbitration agreements to prevent class-action suits.

The ruling applies even when federal antitrust laws are violated. Companies gained significant legal protection.

Impact on Consumer Rights

Class-action lawsuits help consumers band together against powerful corporations. Arbitration clauses eliminate this option.

You must pursue your claim individually, even when thousands face identical problems. Companies avoid accountability through this tactic.

Consumer Success Rates in Arbitration

Research shows arbitration heavily favors businesses over consumers. The statistics are sobering.

Public Citizen Research Findings

Public Citizen analyzed nearly 34,000 arbitration cases filed between 2003 and 2007. Creditors won 94% of all cases.

In over 80% of cases, arbitrators decided based solely on business documents. Consumers won only 0.01% of these “documents only” cases.

That means businesses won 99.99% of cases decided without consumer participation.

CFPB Analysis

The Consumer Financial Protection Bureau reviewed thousands of arbitration agreements. They found widespread consumer impact.

Most consumers had no idea they’d agreed to arbitration restrictions. The CFPB found no evidence that arbitration clauses reduce consumer prices.

Companies benefit from arbitration, but consumers see no offsetting advantages.

When Arbitration Can Help You

Despite poor statistics, arbitration can work in debt collection cases. The key is being the one who demands it.

When you file a Motion to Compel Arbitration, you force collectors to pay fees. Many will drop the case rather than proceed.

Your odds improve dramatically when you use arbitration as a strategic defense. Our partner Solo can help you navigate this process and respond to your lawsuit effectively.

Taking Action on Your Debt Lawsuit

Finding an arbitration clause gives you a powerful defense tool. You can shift the burden back to debt collectors.

Review your credit card agreement today. Search for arbitration language in the dispute resolution section.

If you find a clause, consider filing a Motion to Compel Arbitration. You might avoid court entirely and get the case dismissed.