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December 5, 2016

Citi’s Credit Card Agreement Contains Another Nasty Ploy

Filed under: Finance — Edgar (aka MrConsumer) @ 6:01 am

In October, we told you about an unexpected move by Citi to let credit card customers opt-out of the mandatory arbitration clause in their credit card agreements. The catch: they required you to write an old-fashioned letter to them to do so. (See story.)

We heard from a reader, Daniel D., who says that is not the only dirty trick that Citi employs with respect to its arbitration clause. He said his bank account contract had a very similarly worded provision to this one in the new Citi credit card agreements:


Citi arbitration clause

What does this sound like to you? It sounds pretty positive as an additional way to avoid arbitration. It certainly gives the impression that the customer was free to go to small claims court system instead of being forced into arbitration.

And that is exactly what our reader did. He had a dispute with Citi over some late fees imposed despite his having overdraft protection. There was about $350 in dispute.

To his amazement, once he filed in small claims court, Citi requested the case be moved to a higher court. That action caused the case to no longer “stay in small claims court” and thus Citi could force him into arbitration.


Anyone reading the small claims court provision would come away with the understanding that it was the plaintiff’s decision to keep a case in small claims court and definitely not Citi’s. Implied in every contract is a covenant of good faith, and it certainly seems to be a breach of that good faith for Citi to force this consumer into arbitration by a bit of legal trickery.

Daniel’s problem with Citi began in 2010 and appeared to end when he won the arbitration this past August. There were just two problems: (1) Daniel was not awarded anywhere near the $100,000 he said this whole fiasco cost him, and (2) Citi is appealing.

For more details of Daniel’s misadventures in Citiland, see this CBS MoneyWatch story, and his own account.

We look forward to hearing your thoughts below.

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  1. I have been a Citi customer for several years and I received documents informing about this change.

    It disappointed me to see a company that I’ve supported initiate a policy like this.

    Comment by Wayne R — December 5, 2016 @ 7:13 am
  2. Isn’t there a max to the amount of damages that can be carried out of small claims? I think I recall that in NY State the amount is something like $5000. So how can a suit for $350 be carried to a higher court?

    Edgar replies: Courts are not divvied up by dollar amount the way you think. Yes, small claims has a limit, but that does not preclude a person from going to district court or superior court irrespective of the dollar amount. No one is required to use small claims court.

    Comment by Tony P — December 5, 2016 @ 8:01 am
  3. These types of things are only going to get worse. The consumer has almost no power when it comes to big corporations No one cares about fair business practices anymore except the small business owner.

    Comment by ellen sing — December 5, 2016 @ 8:06 am
  4. This is unreal, just unreal.

    Comment by lisa — December 5, 2016 @ 9:08 am
  5. Just wait until the Supreme Court (as well as most lower courts) become even more corporate friendly due to the party in power and the new president elect.

    Comment by Frank J — December 5, 2016 @ 10:04 am
  6. Another good reason to not do business with Citi. (I use USAA.)

    Comment by russ — December 5, 2016 @ 11:21 am
  7. Consider this if you will. Executives from Citi sat down and consciously figured out a way to deceive its customers who want to sue Citi in small claims court to avoid arbitration. Shameful, shameful, shameful!

    Comment by HMC — December 5, 2016 @ 11:38 am
  8. After reading this I will never use Citibank

    Comment by Linda Kaplan — December 5, 2016 @ 12:34 pm
  9. I stopped doing business with Citibank about 10 years ago because I didn’t like their unethical business practices. That decision was validated during the Great Recession. Now it is again validated–no matter what their advertising says. They are predatory.

    Comment by Donna Kinsey — December 26, 2016 @ 10:46 pm

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