Bank of America Corp., Capital One Financial Corp., JPMorgan Chase & Co. and HSBC Holdings PLC have agreed to settle a class-action lawsuit over credit-card arbitration clauses, according to lawyers representing the plaintiffs.
Those banks and three defendants that have not agreed to settle the suit — Discover Financial Services, Citigroup Inc. and the National Arbitration Forum — have denied any wrongdoing. Representatives of the settling defendants were not immediately available to comment.
The lawsuit accused the credit-card units of Chase, Bank of America, Capital One, HSBC Citigroup, Discover and others of violating antitrust laws by secretly consulting each other numerous times with the aim of requiring cardholders to arbitrate all disputes, plaintiff law firm Berger & Montague PC said.
The Philadelphia-based firm said the settlement, which needs court approval, would require the companies to stop enforcing arbitration clauses and bans on class-action suits against consumer and small-business credit-card holders and to remove those items from their terms for 3 1/2 years. The settlement also requires the defendants to pay $2.35 million for plaintiffs' legal fees and litigation costs.
The lawyers said the suit never sought monetary damages for the cardholders.
The settlement is the latest setback for arbitration, whose biggest provider has drawn congressional and regulatory ire. The National Arbitration Forum ceased consumer-debt arbitrations last year as part of a settlement with the Minnesota attorney general.