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What You Can Do to Protect Yourself Against Binding Mandatory Arbitration Agreements

Authored By: Public Citizen

Information

Binding arbitration agreements (BMAs) are usually found in pre-printed contracts you sign to buy a car, get a credit card or a home mortgage. If you sign a contract that has a BMA, you will have to take any legal problem you have with that contract to binding arbitration - NOT to court with a judge and/or a jury.

Shop around before you borrow or arrange credit!

BMA-Free Credit Cards:

  • Many credit cards issued by national banks have binding mandatory arbitration (BMA) clauses. Choose one that does not, and if you already have a credit card that requires BMA, consider closing it and transferring your outstanding balance to a card that does not have a BMA.
  • AARP (the American Association of Retired Persons) credit cards do not have these clauses.
  • Most credit union credit cards do not have these clauses.
  • Some small bank credit cards do not have these clauses.

Vehicle Purchases:

  • Call the dealership before you buy to find one that does not require BMA. Be willing to walk away from a dealer who insists on BMA in the loan or sales contract.

Home Mortgages:

  • Do not deal with home lenders who require BMA clauses!
  • One tip: Freddie Mac and Fannie Mae do not allow BMA clauses.
  • Many credit unions also do not allow them.

Reviewed May 2009


AlabamaLegalHelp.org offers legal information, not legal advice. We try hard to make sure this website accurately explains your rights and options. However, the site does not apply the law to your personal facts. For this sort of legal advice, you should call a lawyer. To apply for free legal services in Alabama, call the Legal Services Alabama office that is closest to where you live OR call toll-free 1-866-456-4995. You can also apply online at intake.alsp.org.

Last Review and Update: May 14, 2009