A third-party arbitrator, responding to a complaint filed by Discover Financial Services (DFS), has ruled that JPMorgan Chase (JPM) did not mislead consumers regarding its Chase Freedom credit card.

But the arbitrator also recommended that Chase discontinue an advertising claim — "Don't get shortchanged" — that disparaged Discover's cash rewards program.

The decision was announced Wednesday by the National Advertising Division, a self-regulatory organization that frequently settles disputes over credit card advertising claims.

Discover had contended that Chase, which promotes its Freedom card as offering "cash back," inappropriately omitted from its advertisements the fact that customers accrue their rewards as points.

But the third-party arbitrator didn't take issue with Chase's characterization. It concluded that the Chase Freedom card does not lose its status as a "cash back" card merely because customers also have the opportunity to redeem their rewards as points or miles.

The arbitrator also ruled that Chase's assertion about its competitor conveyed the message that the Discover's card "is so inferior to Chase Freedom that Discover cardholders are being cheated, or dealt with unfairly." Consequently, the arbitrator recommended that Chase discontinue its claims that Discover customers are being shortchanged.

The Discover card offered a 0.25% cash-back rate on the first $3,000 of ordinary purchases, which Chase compared unfavorably with its assertion that "Chase Freedom gives you a full 1% cash back from your first purchase."

A Discover spokesman declined to comment on the ruling.

Chase said in a statement that it does not share the arbitrator's concerns regarding the ads Discover challenged. The company added: "Chase discontinued those commercials and claims for independent reasons during the course of this proceeding.

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