HSBC Drops Mandatory Credit Card Arbitration

This month, HSBC joins Capital One, Chase, and Bank of America as the fourth major credit card issuer to drop mandatory arbitration clauses from its terms and conditions after pressure from a pending class action lawsuit. New York residents filed suit against six banks and a leading arbitration services company, citing that recent cardholder agreements removed customers' ability to seek legal damages in state or federal courts.

Ohio Representative Dennis Kucinich told reporters gathered at a press conference that other major lenders uninvolved in the lawsuit had proactively agreed to leave mandatory arbitration clauses out of new cardholder agreements. Representatives from Regions Bank, TD Bank, and PNC Bank reached out to the prominent Democrat, assuring him that their companies would remain outside the arbitration debate.

Proponents of arbitration note that keeping credit card-related lawsuits out of courtrooms saves cardholders money while freeing judges to try more serious cases. Critics of mandatory arbitration say that the process unfairly restricts consumers' access to federal and state legal protection. State lawsuits had previously targeted one major arbitration firm, citing conflicting relationships with collection agencies and debt management companies.