What You Can Do to Protect Yourself Against Binding Mandatory Arbitration Agreements
by: Public Citizen
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:
- Read the Ten Tips for Car Buyers at http://www.callbeforeyoubuy.com/bma-10tips.htm
- 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.
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