Consumer contracts should not be secrets

Shopping for a credit card shouldn’t make you feel like Don Quixote.   

Recently the Consumer Financial Protection Bureau issued its first report on credit cards since Congress passed the CARD Act of 2009.  The Bureau identified some concerns, but it should have included another: making sure consumers can easily obtain all credit card terms before applying for a credit card. 

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Federal law requires credit card companies to provide the Bureau with copies of their agreements for posting on a web site open to the public and to tell consumers financial terms (interest rates, late fees, and the like).  But not all important credit card contract provisions are financial. For example, federal law does not mandate advance disclosure of forced arbitration clauses that take away consumers’ rights to have their day in court and join with others to hold credit card issuers accountable for cheating consumers.  Consequently we set out to discover -- before obtaining the card -- whether the dispute terms of a single credit card contract contained binding arbitration.

AARP advocates against binding arbitration clauses and issues a credit card jointly with JPMorgan Chase so we chose that one.  Our adventure began with a visit to the AARP website that linked to a Chase website offering the AARP Visa Credit Card.  Neither posted the nonfinancial terms.  Accordingly, we called customer service where a “card specialist” explained, incorrectly, that all Chase cards required binding arbitration. After double-checking, the specialist reported, also incorrectly, that Visa insists on arbitration for its cards.  The specialist reported that a copy of these required terms could be provided only to card applicants and suggested a visit to a local branch. 

The Chase branch visit was fruitless.   The employee couldn’t find the credit card’s nonfinancial terms on the premises, or on either the Chase web site advertising the card or its internal site.  Chase’s legal department did not provide a definitive answer to the question when he consulted them.

We kept trying.  After more calls, one of us was told to send a fax to the correspondence department and to expect an answer in about two weeks.  The other was instead directed to a web site which contained the terms of various Chase credit card agreements and was told that a particular agreement is for the AARP card.  Two problems remained. First, that agreement did not mention AARP, and second, the Chase representative had earlier stated that all the Chase credit card agreements were the same, a statement that is demonstrably false because the web site linked to fourteen different credit card contracts.  In short, though we are both lawyers with extensive consumer law experience, we spent more than four hours collectively on our quest.  We spoke to at least a half dozen Chase representatives, and we still are not certain whether we have seen the AARP-Chase agreement, though we confirmed with AARP that it does not contain binding arbitration.  

Just imagine the effort required had we tried to comparison shop among multiple card issuers! To be sure, we could have applied for the credit card, but that can lower credit scores. Another option is to check the federal repository of credit card contracts at the CFPB’s website, but Chase has sixteen contracts listed there and we could not tell which, if any, is the AARP contract.  

It should not be this hard to find contract terms. Congress and the CFPB should mandate that all consumer boilerplate contract terms be available at every physical business and on the website of businesses using them, regardless of the product or service.  Lawmakers should direct that solicitations enable consumers to go straight to the entire terms of the particular contract on the web.

Unfortunately, some businesses disagree.  For example, when the Illinois legislature considered a bill in 2012 that would require standard form contract terms to be available to consumers on the web, it ran into stiff opposition and the bill died.  The Illinois Retail Merchants Association argued that posting contracts would enable competitors to see them.  Of course, those same competitors should be able to obtain the contracts the way any consumer would now—by agreeing to them.  

While many consumers may have little interest in reading contract terms, consumers who do want to know what they are agreeing to – and in many cases the rights they are giving away to their potential detriment -- should have the ability to find out before accepting the terms.  Consumer contracts should not be secrets.  Nor should it take hours, much less lawyers, to find them. It should require a mouse click, not a quest. 

Amato is executive director of Citizen Works and director of its Fair Contracts Project. Sovern is a professor of law at St. John’s University School of Law and co-coordinator of the Consumer Law and Policy Blog.