American Express Arbitration

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Topic Author
joppy
Posts: 534
Joined: Thu Feb 22, 2007 2:45 am

American Express Arbitration

Post by joppy »

I just looked at my Amex Blue Cash Card statement and it comes with a new arbitration policy and an arbitration opt-out. I can reject the "mandatory arbitration" until February 15, 2013.

Is there a benefit to opting out of mandatory arbitration?

Or is there essentially no benefit? It is possible that the main benefit of litigation over arbitration might be better behavior through the threat of class action lawsuits, and since most people aren't going to bother opting out, my opting out will have no benefit.

Is there any drawback to opting out of mandatory arbitration? For example, do they put a "black mark" on your record as an "undesirable" customer?

- Joppy
FinanceGeek
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Joined: Sun Jul 01, 2007 5:27 pm

Re: American Express Arbitration

Post by FinanceGeek »

Many businesses put mandatory arbitration clauses in their customer service agreements. In most cases they are non-negotiable.

Its certainly possible that Amex will close your account if you opt-out.
Topic Author
joppy
Posts: 534
Joined: Thu Feb 22, 2007 2:45 am

Re: American Express Arbitration

Post by joppy »

FinanceGeek wrote:Many businesses put mandatory arbitration clauses in their customer service agreements. In most cases they are non-negotiable.

Its certainly possible that Amex will close your account if you opt-out.
Hmm, but this isn't a "mandatory" arbitration. In fact, it has an "opt-out" clause. Obviously if it were mandatory, then the only way to "opt-out" is to close the account. But would they close an account after giving you the option of a "voluntary" opt-out?

Joppy
sport
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Location: Cleveland, OH

Re: American Express Arbitration

Post by sport »

joppy wrote:
FinanceGeek wrote:Many businesses put mandatory arbitration clauses in their customer service agreements. In most cases they are non-negotiable.

Its certainly possible that Amex will close your account if you opt-out.
Hmm, but this isn't a "mandatory" arbitration. In fact, it has an "opt-out" clause. Obviously if it were mandatory, then the only way to "opt-out" is to close the account. But would they close an account after giving you the option of a "voluntary" opt-out?

Joppy
I have a similar opt out provision on my Costco amex card. However, the description of the opt out includes the following: "Rejecting the Arbitration provision will not affect your ability to use your card or any other benefit, product, or service you may have with your account."
If you take them at their word, they will not close your account. However, I would check the wording provided with your account to make sure it is the same as the Costco amex wording.
Jeff
Topic Author
joppy
Posts: 534
Joined: Thu Feb 22, 2007 2:45 am

Re: American Express Arbitration

Post by joppy »

jsl11 wrote:I have a similar opt out provision on my Costco amex card. However, the description of the opt out includes the following: "Rejecting the Arbitration provision will not affect your ability to use your card or any other benefit, product, or service you may have with your account."
If you take them at their word, they will not close your account. However, I would check the wording provided with your account to make sure it is the same as the Costco amex wording.
Jeff
Interesting ... Did you opt out?

I haven't decided yet, nor have I checked the wording yet.

Thanks,
Joppy
sport
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Location: Cleveland, OH

Re: American Express Arbitration

Post by sport »

joppy wrote:
jsl11 wrote:I have a similar opt out provision on my Costco amex card. However, the description of the opt out includes the following: "Rejecting the Arbitration provision will not affect your ability to use your card or any other benefit, product, or service you may have with your account."
If you take them at their word, they will not close your account. However, I would check the wording provided with your account to make sure it is the same as the Costco amex wording.
Jeff
Interesting ... Did you opt out?

I haven't decided yet, nor have I checked the wording yet.

Thanks,
Joppy
I have not yet decided. To me, the strange thing is: Why are they offering a choice? I would expect them to say here are the new rules and if you use your card you agree to them. My guess is that there is some law or regulation that requires them to offer a choice. I do not believe that they would do so out of the goodness of their heart. I would expect that they would not close my account if I write the letter. I believe their agreement with Costco would not allow them to cancel a good customer. It is in their interest and Costco's interest to keep me using the card, especially at Costco.
Jeff
robocop
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Joined: Fri Jan 27, 2012 8:44 pm

Re: American Express Arbitration

Post by robocop »

There are many benefits to opting out of arbitration, particularly as a consumer. There has been growing evidence over the years that arbitrators have connections with the companies/industries they do most of their arbitration work with. In other words, Arbitrator Joe knows that Amex won't send any of their arbitration work to him unless he consistently finds in their favor. Thus, Arbitrator Joe finds in favor of Amex. I did pro bono work on a collections case for a Katrina victim a few years ago and sadly had to advise the client that their chances in arbitration looked very slim- although the late fees were way higher than what she should have been charged, virtually no consumers ever won in that arbitration forum, even if they had a meritorious case.

Furthermore, even if arbitrators were completely neutral, there are many advantages to litigation over arbitration. Discovery is much more extensive, which means you have the power to make the other side give up documents that could help you prove your case. Discovery in arbitration is much more limited, and so you may not be able to get that smoking gun evidence you need to win your case. You also are often limited in who can present testimony- thus, you may not be able to have an expert testify for your side, or third party witnesses, etc.

The more important reason that opting out is important, though, is that if enough people do not opt out, there will be no possibility to file a class action lawsuit against the company. For example, you would never pay a couple of hundred/thousand dollars in arbitration fees against a company engaging in an illegal practice over $10 or $15, no matter how meritorious the claim. The only way these illegal practices that only result in small amounts of harm per consumer ever get addressed is through class action lawsuits, where the prospect of a large settlement for an entire class of people who were wronged entices a lawyer to take up the case on a contingency basis if the case has merit.
Fallible
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Re: American Express Arbitration

Post by Fallible »

You are absolutely right to be asking these questions on arbitration. Here's an excellent pros/cons on the subject from nolo.com, including the effects of final decisions and rising costs.

http://www.nolo.com/legal-encyclopedia/ ... 29807.html
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
worriedGuy
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Joined: Thu Nov 15, 2012 11:48 am

Re: American Express Arbitration

Post by worriedGuy »

It appears that one forfeits their right to class action suits against AmEx by agreeing to this new arbitration policy.

http://consumerist.com/2012/10/19/ameri ... o-opt-out/
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