Attorney General Richard Blumenthal today warned consumers that two of the nation's largest credit card companies -- Capital One and CitiBank -- will soon require binding arbitration to settle disputes.

"Consumers seeking to sue their credit card company may find a locked courthouse," Blumenthal said. "I urge consumers with Capital One or CitiBank credit cards to exercise their right to reject the binding arbitration option and avoid other form contracts with such provisions. Consumers may want to consider other credit companies that don't require binding arbitration. Binding arbitration guts consumer rights that are key to fairness and due process -- rights to discovery, appeal, and state protection."

With binding arbitration agreements, consumers will be barred from seeking judicial relief in the event of a dispute. The agreements may also allow the credit card companies to select the arbitrators, choose the location of the proceedings, exclude certain recoveries, shorten the statute of limitations, deny discovery and other procedural protections, and eliminate virtually any right to appeal, Blumenthal said. It also may undermine consumer rights under federal or state laws against unfair credit practices. States' power to protect consumers has been severely undercut by recent court decisions.

Blumenthal warned that both Capital One and CitiBank have been including notices about the arbitration provision in bills to consumers. Consumers may "opt out" of the agreement by filling out a form that the credit card companies provide. Consumers who open new accounts with Capital One and CitiBank will not be able to "opt out."

The CitiBank notice provides that if consumers do not accept the binding arbitration provisions contained in the notice, they can continue to use the card under the existing terms until the end of the current membership year or the expiration date on the cards, which ever is later. At that time, the account will be closed, and consumers will be able to pay off any remaining balance under existing terms. The Capital One notice states that if consumers return the Arbitration Rejection Coupon, "the arbitration provision will not become a part of the agreement at this time." However, it may be added when the contract is renewed on a take-it-or-leave-it basis.