What law governs credit card agreements?

[Harry Seaward]

@fisthardcheese @BV80

I have a bank that I have claims against, and they have an arbitration clause in their agreement.  I filed my claims with AAA, as provided in the arb provision, and got a letter from AAA stating that this bank has not paid their annual fees to AAA, and AAA is therefore not administering any claims related to this bank.  (We've seen a similar thing when JDBs have an outstanding bill they haven't paid.)   So my position is that the entire arb provision in the card agreement is bogus.  If I'm correct, that could mean they have no protection against class action lawsuits.  This particular agreement has a class action waiver, but it's contained within the arb provision.  So I have two questions.  First, is there a law/act/etc that governs the truth of the conditions stated in credit card agreements?  And second is two part.  A.) is it really that simple that a credit card company can include a "you waive your right to class action" in a credit card agreement, and B.) is the fact that this waiver is wedged into the bogus arbitration provision of any consequence in this situation?  There is a severability clause, but my argument is that the Arb provision should be read as a whole, and the class action waiver is tied to the arb provision.

(I've looked through the Fair Credit Billing Act and Truth In Lending Act, and neither seem to address credit card agreements, or generally deceptive statements made to account holders.  Because the claims are only mine and have nothing to do with credit reporting, the FCRA is not applicable.)

[BV80]

1 hour ago, Harry Seaward said:

@fisthardcheese @BV80

I have a bank that I have claims against, and they have an arbitration clause in their agreement.  I filed my claims with AAA, as provided in the arb provision, and got a letter from AAA stating that this bank has not paid their annual fees to AAA, and AAA is therefore not administering any claims related to this bank.  (We've seen a similar thing when JDBs have an outstanding bill they haven't paid.)   So my position is that the entire arb provision in the card agreement is bogus.  If I'm correct, that could mean they have no protection against class action lawsuits.  This particular agreement has a class action waiver, but it's contained within the arb provision.  So I have two questions.  First, is there a law/act/etc that governs the truth of the conditions stated in credit card agreements?  And second is two part.  A.) is it really that simple that a credit card company can include a "you waive your right to class action" in a credit card agreement, and B.) is the fact that this waiver is wedged into the bogus arbitration provision of any consequence in this situation?  There is a severability clause, but my argument is that the Arb provision should be read as a whole, and the class action waiver is tied to the arb provision.

(I've looked through the Fair Credit Billing Act and Truth In Lending Act, and neither seem to address credit card agreements, or generally deceptive statements made to account holders.  Because the claims are only mine and have nothing to do with credit reporting, the FCRA is not applicable.)

The arbitration provision isn’t bogus.  By failing to pay, they possibly waived the right to demand arbitration if you were to file a lawsuit.

Did you file a MTC with the applicable court?

[WhoCares1000]

Sometimes we are looking for a particular statute when the answer may be in common law. This might be a case of contract law where Blackstone's Commentaries might apply.

Also, the arbitration rules when it comes to court is relatively new and thus, the courts are still ruling on what the rules might be and lawyers are looking for ways to get their clients claims through as cheaply as possible. This is still a fluid area of law where questions like the above need to be worked out by the courts.

[Harry Seaward]

18 hours ago, BV80 said:

Did you file a MTC with the applicable court?

I didn't. It wasn't a requirement of the agreement. 

18 hours ago, BV80 said:

The arbitration provision isn’t bogus.

The entire provision is about using AAA for arbitration. If AAA won't hear the case, the arb provision is meaningless. 

[Harry Seaward]

12 hours ago, WhoCares1000 said:

This might be a case of contract law where Blackstone's Commentaries might apply.

Good tip. It may also be addressed in Restatement, so I'll look into that as well. 

[BV80]

4 minutes ago, Harry Seaward said:

I didn't. It wasn't a requirement of the agreement. 

The entire provision is about using AAA for arbitration. If AAA won't hear the case, the arb provision is meaningless. 

The agreement doesn’t include that the provision is governed by the Federal Arbitration Act?

[Harry Seaward]

5 hours ago, BV80 said:

The agreement doesn’t include that the provision is governed by the Federal Arbitration Act?

It does.

[WhoCares1000]

10 hours ago, BV80 said:

The agreement doesn’t include that the provision is governed by the Federal Arbitration Act?

The Fair Arbitration Act is not going to think of everything. In fact, I believe that was passed prior to the NAF scandal and when there were not limits on consumer arbitration fees. The landscape changed but the statute did not. In fact, the system is now trying to figure out class action arbitration in light of cases brought against Uber in AAA.

[BV80]

3 hours ago, WhoCares1000 said:

The Fair Arbitration Act is not going to think of everything. In fact, I believe that was passed prior to the NAF scandal and when there were not limits on consumer arbitration fees. The landscape changed but the statute did not. In fact, the system is now trying to figure out class action arbitration in light of cases brought against Uber in AAA.

I didn’t mean to imply that the Federal Arbitration Act thought of everything.  Sorry about that.

The NAF scandal was based on the fact that NAF was in bed with creditors and debt collectors.   For instance, it was discovered that the NAF Forum was financially affiliated with a New York hedge fund group that owns one of the country’s major debt collection enterprises.  I believe Mann Bracken was included in one of those enterprises.

Consumers very rarely won in that forum because the vast majority of the time the arbitrators ruled in favor of creditors/debt collectors.  Then they would assess the creditors’ fees to the consumers.  

My point in bringing up the FAA is that arbitration provisions governed by that act are bound by it.  The parties can’t get out of it unless a party can show that the provision is unconscionable.

In regard to a class action referenced by @Harry Seaward, bringing a class action has to be approved by the court.

Anyway, as we know, the FAA says that upon refusal of a party to arbitrate, the other party can MTC arbitration.  The bank has definitely refused to arbitrate, so I think it might be a good idea to MTC.  Either the bank would want to go ahead and settle, or the court would order the parties to arbitrate.

If a court order is issued, the bank would then want to settle or it would refuse to arbitrate again.  In the event they refuse again, that’s 2 refusals to arbitrate.  One of those refusals would be in defiance of a court order.  At that point, if a class action lawsuit is brought, it seems it should be easy to show that the bank has waived the right to arbitrate as long as the claims in the class action are the same claims that were brought in arbitration.  I don’t know what would happen if the claims were different.

 

[WhoCares1000]

The issue here though is unlike the cases brought by banks and JDBs against debtors who owe, @Harry Seawardis trying to bring a claim against a bank. Since the contract requires that the claim be arbitrated, Harry tried to start an arbitration case with AAA in accordance to the contract. AAA has told Harry that they will not take the case because the bank has not paid fees from other cases already (or some other reason involving fees). At this point, should the bank be allowed to enforce the arbitration agreement in court since they already breached it and if not, could this open them up to a class action suit. In other words, does the breach of the arbitration part of contract override the Fair Arbitration Act? This is an issue for a judge to decide. Another question is that should a plaintiff be forced to take a defendant to court to force them into arbitration when the point of arbitration was to avoid court to being with?

The closest we had to deciding this was the cases filed in arbitration against Uber in 2018 where Uber was refusing to pay the fees for a huge number of cases involving the same claim. Uber however decided to settle those cases out of arbitration and court (and I am sure there are NDAs on those settlements). That is why the arbitration companies came out with the sliding fee setup for what essentially is the same claim filed multiple times against the same company. Uber is now fighting for that sliding scale fee in another claim involving Uber Eats fee reductions for BIPOC communities.

The point is that arbitration is supposed to be an alternative forum to decide issues and claims rather than civil court. It is not supposed to be a method to avoid litigating those claims completely.

[BV80]

52 minutes ago, WhoCares1000 said:

AAA has told Harry that they will not take the case because the bank has not paid fees from other cases already (or some other reason involving fees).

I thought AAA would take cases filed by consumers no matter the past status of the bank.

 

52 minutes ago, WhoCares1000 said:

At this point, should the bank be allowed to enforce the arbitration agreement in court since they already breached it and if not, could this open them up to a class action suit. In other words, does the breach of the arbitration part of contract override the Fair Arbitration Act?

At this point, I don’t know if the bank could enforce arbitration or not.  If they case was denied for past failure to pay fees, that may not be considered a waiver of their right to compel.  That’s why I suggested a MTC.  Disobeying a court order is a different story.  

 

52 minutes ago, WhoCares1000 said:

Another question is that should a plaintiff be forced to take a defendant to court to force them into arbitration when the point of arbitration was to avoid court to being with?

 It’s why §4 of the FAA was included.  There has to be a refusal to arbitrate before a MTC can be filed.  The only way the lawsuit would be heard in court is if the MTC was denied.

I was just thinking along the lines of having a court order to arbitrate and a refusal b the other party as evidence of that party’s waiver of the right to arbitrate if it came down to them trying to get out of a class-action lawsuit.  But who knows?  With a court order, they may agree to arbitrate. 

[Harry Seaward]

3 hours ago, BV80 said:

I thought AAA would take cases filed by consumers no matter the past status of the bank.

Their letter to me said AAA are not administrating any claims involving this bank, because this bank has outstanding fees, and had not registered its arbitraion clause on the Consumer Clause registry.  This sounds to me like they either never actually registered with AAA, or AAA requires regular updating of the agreements that includes a fee to AAA. The bank has no claims against me, so this isn't the typical sued-for-a-debt arbitration case that comes through here.  IIRC, the AAA letter in those cases says that AAA will still take the case if the consumer gets a court order.  That language is not present in the letter they sent me.

[BV80]

28 minutes ago, Harry Seaward said:

Their letter to me said AAA are not administrating any claims involving this bank, because this bank has not paid the required annual 'membership' fee. The bank has no claims against me, so this isn't the typical sued-for-a-debt arbitration case that comes through here. 

Let’s see if @BackFromTheDebt has any information about this.

[Harry Seaward]

2 minutes ago, BV80 said:

Let’s see if @BackFromTheDebt has any information about this.

I edited my post as you were replying to clarify the 'fee', since there was a little more to it that just money.

[BackFromTheDebt]

39 minutes ago, BV80 said:

Let’s see if @BackFromTheDebt has any information about this.

What bank is this?

[Harry Seaward]

10 minutes ago, BackFromTheDebt said:

What bank is this?

One that you've likely never heard of.