Earlier this year, two large arbitration firms announced they would no longer be handling credit card collection disputes. Now comes word that, as a result of a huge class action lawsuit against the major banks, many of them are starting to drop the language in their contracts that requires consumers to engage in binding arbitration rather than taking their case to the courts. Earlier this week, B of A announced it would drop these requirements for consumer and small business agreements for at least three and a half years. On Thursday, Capital One became the latest bank to agree to drop the clause, as part of a settlement over the lawsuit. B of A and Cap One join JPMorgan Chase, which had previously reached a similar agreement in November.

These settlements are hailed as a victory for credit card users, as many consumer advocates have viewed the arbitration process as being unfairly biased towards the credit card companies.

A new study by the Center for Responsible Lending finds that credit card issuers have managed to find new ways to pad their profit and work around the Federal Reserve Board rules and federal law set to take effect in February 2010. Even as old abuses are outlawed, CRL finds that new ways to squeeze fees out of consumers are being introduced and popularized.
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The latest quarterly Fed survey of bank loan officers found that banks expect to tighten or have already tightened credit card terms on all borrowers, as a direct result of the impending enactment of the Credit CARD Act.
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