WASHINGTON–A coalition of 25 consumer advocacy and public interest organizations is criticizing Bank of America over a new arbitration clause added to the bank’s Online Banking Service Agreement, arguing the provision limits customers’ legal rights and shields the bank from public accountability.
The groups said the clause requires customers to resolve disputes through binding arbitration rather than through the court system, eliminating consumers’ right to a jury trial and preventing participation in class-action lawsuits.
“Bank of America should immediately remove the arbitration clause from any of its contracts with consumers,” Patrick Crotty, senior attorney at the National Consumer Law Center, said in a statement issued by the coalition.
‘The Clock Has Started’
According to the advocacy groups, Bank of America customers have 60 days after receiving notice of the agreement change to opt out of the arbitration provision. The organizations argued many consumers may not realize the clock has started because the opt-out language is embedded in lengthy contract terms.
The coalition also released a consumer resource designed to help customers navigate the opt-out process.
Consumer advocates said the bank had not used forced arbitration clauses in consumer agreements for nearly 17 years following a 2009 antitrust lawsuit involving Bank of America and several other major financial institutions, including Capital One, JPMorgan Chase, Discover and HSBC.
In that case, credit card borrowers alleged the banks colluded to include arbitration provisions in customer agreements to block consumers from pursuing individual and class-action claims under state and federal law.
‘Particularly Harmful’
The groups argued the new arbitration clause is particularly harmful for consumers with small-dollar claims because pursuing individual arbitration cases can be prohibitively expensive.
“Unlike individuals, large and powerful companies like Bank of America can become repeat customers of arbitration companies, incentivizing arbitrators to decide disputes against consumers and in the corporations’ favor,” the coalition said in its statement.
Crotty called the consumer arbitration system “rigged” and urged Bank of America to remove the clauses from all customer agreements.
The advocacy groups also pointed to pending federal legislation that would ban mandatory arbitration clauses in many consumer contracts. The Forced Arbitration Injustice Repeal (FAIR) Act, or FAIR, Act, introduced by Rep. Hank Johnson and Sen. Richard Blumenthal, would preserve consumers’ ability to pursue claims in court against banks and other corporations, according to the coalition.
