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THIRD DIVISION
June 30, 2003

JUSTICE WOLFSON delivered the opinion of the court:

This case serves as a reminder that people should read their mail -- especially when itcomes from their credit card companies. At issue here is the enforceability of an arbitrationclause in an amended credit card agreement.

Betty Hutcherson and Sheila Wilson filed a class action against Sears Roebuck &Company (Sears), Sears National Bank (SNB), and Allstate Insurance Company (Allstate),alleging unauthorized charges on their Sears credit cards. Sears, SNB, and Allstate filed motionsto compel arbitration and stay proceedings, contending Hutcherson and Wilson accepted anamendment to the credit agreement allowing either party to compel arbitration. The trial courtdenied the motions. Sears, SNB, and Allstate appeal. We reverse and remand.

BACKGROUND

THE COMPLAINT

According to the complaint, Sears offers credit cards to its customers. In conjunctionwith Allstate and SNB, it also offers its customers credit insurance, called the Sears AccountCarePlan (Plan). The application for a Sears credit card includes an enrollment option for the Plan ona prepaid postage form directing that the information be sent back to Sears. The cost of the Planis $0.96 for every $100 of outstanding balance on the card.

Both Hutcherson and Wilson applied for and received Sears credit cards. Neither appliedfor or requested the Plan. Both were charged for the Plan. Although both women called Searsabout the charges, Sears continued to bill them for the Plan without their authorization.

The women filed a class action lawsuit seeking declaratory and injunctive relief as well asrelief under the doctrines of unjust enrichment and constructive trust. They also brought a countunder the Illinois Consumer Fraud and Deceptive Business Practices Act.

THE MOTIONS TO STAY THE PROCEEDINGS AND COMPEL ARBITRATION

On August 1, 2002, Sears and SNB filed a motion to stay the proceedings and compelarbitration. Allstate filed a similar motion the following day. Copies of the original credit cardagreements applicable to Hutcherson's and Wilson's accounts were attached to both motions.

Both agreements contain a "Governing Law" provision, which states, in relevant part:

"This agreement and my account will be governed by and interpreted in accordance withthe laws of the State of Arizona and the United States, regardless of where I live or whereI use my account ***."

Both agreements also contain a "Change of Terms" provision that states, "As permitted by law,SNB has the right to change any term or part of this agreement, including the rate of FinanceCharge, applicable to current and future balances." Neither agreement contained an arbitrationprovision.

According to an affidavit in support of the motion to compel arbitration, credit cardcustomers were sent a notification of amendments to the credit card agreement in March or April2001. The cover letter did not mention an arbitration provision, but stated:

"The changes to the terms governing your Account will become effective 30 days fromyour receipt of this notice, unless you notify us in writing before that date at ***. In yourwritten notice, *** please state that you wish to reject the new Agreement. If you sonotify us, you will not be able to make additional purchases and you may pay theoutstanding balance under the terms currently governing your Account."

The mailing also included a pamphlet containing the revised credit card agreement. Section 21 of the pamphlet contained an arbitration provision that read, in part:

"Any and all claims, disputes or controversies of any nature whatsoever (whether incontract, tort, arising out of statute, or otherwise) arising out of, relating to, or inconnection with: (a) this Agreement; *** (e) the establishment, operating, handling ortermination of the Account; (f) any transaction or attempted transaction relating to theAccount; or (g) the validity, scope or enforceability of this arbitration section of thisAgreement or any prior credit card agreement ***, shall be resolved, upon your electionor our election, by final and binding arbitration before a single arbitrator, on an individualbasis without resort to any form of class action, except that each party retains the right toseek relief in a small claims court, on an individual basis without resort to any form ofclass action, for claims within the scope of the jurisdiction of the small claims court."

All of section 21, including the above-quoted paragraph, was in the same font and size as the restof the text in the pamphlet, except for the following paragraph:

"YOU UNDERSTAND AND AGREE THAT, UNDER THIS AGREEMENT, IFARBITRATION IS CHOSEN BY YOU OR US, YOU WILL NOT HAVE THE RIGHTTO GO TO COURT (EXCEPT FOR SMALL CLAIMS COURT) ON THAT CLAIMOR TO HAVE A JURY TRIAL ON THAT CLAIM. IF ARBITRATION IS CHOSEN,YOU ALSO WILL NOT BE ABLE TO PARTICIPATE AS A REPRESENTATIVE ORMEMBER OF ANY CLASS OF CLAIMANTS PERTAINING TO THAT CLAIM ANDYOU WILL HAVE ONLY THOSE RIGHTS THAT ARE AVAILABLE INARBITRATION. THE DECISION OF THE ARBITRATOR WILL BE FINAL ANDBINDING EXCEPT AS PROVIDED IN THE FEDERAL ARBITRATION ACT."

The amended credit card agreement also contains a revised "Governing Law" provision,which states:

"This agreement and your Account will be governed by and interpreted in accordancewith Federal law and, to the extent governed by state law, the laws of the State ofArizona, regardless of where you live or where you use the Account."

In their motions to compel arbitration, Sears, SNB, and Allstate contended the arbitrationclause and the Federal Arbitration Act (FAA), 9 U.S.C.A.