Basically, both you and Discover have the right to choose binding arbitration over litigation if a dispute arises.
Arbitration is an alternative to using the court system to resolve disputes that may arise between you and Discover. In arbitration, disputes are resolved by an independent arbitrator instead of a judge or jury. If a dispute arises between you and Discover, either of us may choose to resolve the dispute through arbitration, but Discover has agreed not to choose arbitration for lawsuits filed in small claims court.
Arbitration has a number of advantages. Some of the advantages are that it is generally a more informal and simplified process for dispute resolution and involves more limited exchanges of information than the court system. As a result, arbitration can be faster and less expensive than resolving a dispute through the court system.
Your Cardmember Agreement provides for a choice of two national arbitration organizations to resolve disputes between you and Discover: The American Arbitration Association and JAMS (formerly Judicial Arbitration & Mediation Services).
The rules for arbitration are provided in the Cardmember Agreement and by the arbitration organization. Your Cardmember Agreement also provides that arbitration hearings will take place near where you live, and under certain circumstances some of the arbitration fees will be paid by Discover. You do have the right to reject arbitration by sending a written notice of rejection within 30 days after receiving your card (so long as you have not already accepted arbitration). Of course, even if you reject arbitration you may continue to use your account.
Agreement to Arbitrate
If a dispute arises between you and us, either may choose to resolve the dispute by binding arbitration, as described below, instead of in court. Any claim (except for a claim challenging the validity or enforceability of this arbitration agreement, including the Class Action Waiver) may be resolved by binding arbitration if either side requests it. This includes claims and disputes relating to any other Account or agreement you have or had with us. THIS MEANS IF EITHER YOU OR WE CHOOSE ARBITRATION, NEITHER PARTY SHALL HAVE THE RIGHT TO LITIGATE SUCH CLAIM IN COURT OR TO HAVE A JURY TRIAL. ALSO DISCOVERY AND APPEAL RIGHTS ARE LIMITED IN ARBITRATION.
CLASS ACTION WAIVER
ARBITRATION MUST BE ON AN INDIVIDUAL BASIS. THIS MEANS NEITHER YOU NOR WE MAY JOIN OR CONSOLIDATE CLAIMS IN ARBITRATION BY OR AGAINST OTHER CARDMEMBERS, OR LITIGATE IN COURT OR ARBITRATE ANY CLAIMS AS A REPRESENTATIVE OR MEMBER OF A CLASS OR IN A PRIVATE ATTORNEY GENERAL CAPACITY.
Only a court, and not an arbitrator, shall determine the validity and effect of the Class Action Waiver. Even if all parties have opted to litigate a claim in court, you or we may elect arbitration with respect to any claim made by a new party or any new claims later asserted in that lawsuit.
Your Right to Go To Small Claims Court
We will not choose to arbitrate any claim you bring in small claims court. However, if such a claim is transferred, removed or appealed to a different court, we may then choose to arbitrate.
Governing Law and Rules
This arbitration agreement is governed by the Federal Arbitration Act (FAA). Arbitration must proceed only with the American Arbitration Association (AAA) or JAMS. The rules for the arbitration will be those in this arbitration agreement and the procedures of the chosen arbitration organization, but the rules in this arbitration agreement will be followed if there is disagreement between the agreement and the organization's procedures. If the organization's procedures change after the claim is filed, the procedures in effect when the claim was filed will apply. For a copy of each organization's procedures, to file a claim or for other information, please contact:
AAA at 335 Madison Ave., Floor 10, New York, NY 10017-5905, www.adr.org (phone 1-800-778-7879) or JAMS at 620 Eighth Ave., Floor 34, New York, NY 10018, www.jamsadr.com (phone 1-800-352-5267).
If both AAA and JAMS are completely unavailable, and if you and we cannot agree on a substitute, then either you or we may request that a court appoint a substitute.
Fees and Costs
If you wish to begin an arbitration against us but you cannot afford to pay the organization's or arbitrator's costs, we will pay those costs if you ask us in writing. Any request like this should be sent to Discover, PO Box 30421, Salt Lake City, UT 84130-0421. If you lose the arbitration, the arbitrator will decide whether you must reimburse us for money we advanced for you for the arbitration. If you win the arbitration, we will not ask for reimbursement of money we advanced. Additionally, if you win the arbitration, the arbitrator may decide that you are entitled to be reimbursed your reasonable attorneys' fees and costs (if actually paid by you).
Hearings and Decisions
Arbitration hearings will take place in the federal judicial district where you live.
A single arbitrator will be appointed. The arbitrator must:
- Follow all applicable substantive law, except when contradicted by the FAA;
- Follow applicable statutes of limitations;
- Honor valid claims of privilege;
- issue a written decision including the reasons for the award.
The arbitrator's decision will be final and binding except for any review allowed by the FAA. However, if more than $100,000 was genuinely in dispute, then either you or we may choose to appeal to a new panel of three arbitrators. The appellate panel is completely free to accept or reject the entire original award or any part of it. The appeal must be filed with the arbitration organization not later than 30 days after the original award issues. The appealing party pays all appellate costs. The appellate panel may order that the loser of the appeal pay the winner's costs and attorneys' fees.
Any arbitration award may be enforced (such as through a judgment) in any court with jurisdiction.
Other Beneficiaries of this Provision
In addition to you and us, the rights and duties described in this arbitration agreement apply to: our Affiliates and our and their officers, directors and employees; any third party co-defendant of a claim subject to this arbitration provision; and all joint Accountholders and Authorized Users of your Account(s).
Survival of this Provision
This arbitration provision shall survive:
- closing of your Account;
- voluntary payment of your Account or any part of it;
- any legal proceedings to collect money you owe;
- any bankruptcy by you; and
- any sale by us of your Account.
You May Have the Right to Reject Arbitration
You may reject the Arbitration of Disputes section but only if we receive from you a written notice of rejection within 30 days of your receipt of the Card. You must send the notice of rejection to: Discover, PO Box 30938, Salt Lake City, UT 84130-0938.
Your rejection notice must include your name, address, phone number, Account number and personal signature. No one else may sign the rejection notice for you. Your rejection notice also must not be sent with any other correspondence. However, if you previously had the chance to reject an arbitration agreement with us but did not, you may not reject it now. Rejection of arbitration will not affect your other rights or responsibilities under this Agreement or your obligation to arbitrate disputes under any other account as to which you and we have agreed to arbitrate disputes. If you once sent us a rejection notice on a different account or card, you must send us a new rejection notice or else this arbitration agreement will apply to any disputes with us relating to your other accounts or cards.