A federal district court in Alabama upheld a credit card arbitration agreement treating the cardholder’s use of the card as assent to the corresponding terms and conditions.

In Jefferson v. HSBC Bank, Nevada, N.A., No. 2:08-cv-121-WKW, 2008 WL 2559395 (M.D. Ala. June 23, 2008), Jefferson bought a computer using his HSBC credit card. Jefferson alleged that he later returned the computer, but instead of being credited for the price of the computer, he was charged a second time.

Jefferson brought suit against HSBC for alleged violations of the Consumer Credit Protection Act. HSBC moved to compel arbitration in accordance with the signed credit card application. Jefferson argued that he was not bound by the credit card application because he did not receive a copy of the application until after he had used the card.

The Court rejected Jefferson’s argument. The Court noted that "[i]n contracts, as in life, we must look before we leap. This court, like other courts, consistently holds that use of a credit card indicates a user’s assent to be bound by the terms of the card member agreement."

When Jefferson signed the credit card application to receive his credit card, he was placed on notice that the card agreement would contain terms and conditions that he would be subject to, such as an agreement to arbitrate.

Jefferson chose to use the credit card, thus assenting to the card’s terms and conditions. Accordingly, the Court granted HSBC’s motion and ordered the parties to arbitrate their dispute.